HOW  TO 

RUN  A  STORE 

AT  A  PROFIT 


METHODS  BY  WHICH  SDOY 
TWO  RETAILERS  SOLD  MORE 
GOODS  AT  LESS  EXPENSE 


p 


•^ok  is  DUE  on  the  last  date  stamped  below 


SOUTHERN    BRANCH 

UNIVERSil  V  OF  CALIFORNIA 
LIBRARY 

LOS   ANGELES,  CALIF. 


HOW  TO 

RUN  A  STORE 

AT  A  PROFIT 


FIGURING     EXPENSES     AND 

MARK-UP— COUNTER     AND     WINDOW 

DISPLAYS— HOW    A    RETAILER    IN 

CREASED      BUSINESS     400%      IN 

FOURTEEN  MONTHS— SHORT  CUTS 

IN  HANDLING  TRADE— LARGER 

NET     PROFITS— TRAINING 

YOUR    MEN    TO     SELL 


METHODS  BY  WHICH  62 
RETAILERS  SOLD  MORE 
GOODS  AT  LESS  EXPENSE 


A.  W.  SHAW  COMPANY 

CHICAGO  NEW  YORK 

A.  W.  SHAW  COMPANY.  Ltd..  LONDON 

1913 

-10  ^^b 


THE  MACAUNE  OF  DUSINESS 


SYSTEM  "HOW-BOOKS" 

How  TO  Increase  Your  Sales 
How  TO  Increase  a  Bank's  Deposits 
How  TO  Systematize  the  Day's  Work 
How  TO  Increase  tub  Sales  of  the  Stork 
How  TO  Sell  Real  Estate  at  a  Profit 
How  TO  Sell  More  Life  Inscrancb 
How  TO  Sell  More  Fire  Inscrancb 
How  TO  Write  Letters  that  Win 
How  TO  Talk  Bcsiness  to  Win 
How  TO  Write  Advertisements  that  Sell 
How  to  Sell  Office  Appliances  and  Supplies 
How  to  Collect  Monet  bv  Mail 
How  TO  Finance  a  Bcsiness 
How  TO  Run  a  Store  at  a  Profit 
Others  in  Preparation 

FACTORY  "HOW-BOOKS" 

How  to  Get  More  Out  of  Your  Factory 
How  Scientific  Management  is  Applied 
How  to  Get  Help 
How  to  Cut  Your  Coal  Bill 
How  TO  Handle  Your  Workmen 
How  TO  Systematize  Your  Factory 
Others  in  Preparation 

STAND-\RD  VOLUMES  AND  SETS 

THE  KNACK  OF  SELLING 

(In  Six  Books) 

BUSINESS  CORRESPONDENCE  LIBRARY 

(Three  Volumei) 

BUSINESS  MAN'S  LIBRARY 
(Ten  Volumes) 

BUSINESS  ADMINISTRATION 


BUSINESS  MAN'S  ENCYCLOPEDIA 

(Two  Volumes) 

BUSINESS  LAW  LIBRARY 

(Five  Volumes) 

THE  SYSTEM  OF  BUSINESS 
(Ten  Units — Thirty  Volumes) 

In  Preparation 


1H£  MACAZIME  (/MANACtHIKT 


Copyright,  191S,  bt 
A.  W.  SHAW  COMPANY 


v\ 


^3 


CONTENTS 


PART  I 
FIGURING  YOUR  EXPENSES  AND  PROFITS 

Face  the  Facts 
Chapter  Page 

I    Fixing  Prices  to  Cover  Expenses 7 

II    What  It  Should  Cost  You  to  Keep  Store    ....      17 

m    Where  to  Reduce  Expenses 29 

IV    How  to  Reckon  and  Watch  Profits 37 

PART  II 
HOW  TO  HANDLE  YOUR  TRADE 

The  Store  That  Serves 

V    Making  Window  Displays  Draw  Trade 45 

VI    Floor  Plans  and  Store  Lay-out 53 

VII    Giving  Customers  Prompt  Service 61 

VIII    Storekeeping  Short  Cuts 72 

PART  III 
REPLACING  GUESSWORK  WITH  FACTS 

Darrell  Maxims 

IX    What  a  Branch  Store  Taught  a  Grocer 83 

X     Bringing  a  Store  System  up  to  Date 89 

XI  Fitting  Sales  Methods  to  the  Customer       ....  95 

XII    Buying  to  Suit  the  Trade 105 


4  CONTENTS 

PART  IV 
MANAGING  STOCKS  AND  EMPLOYES 

Advertise  to   Your  Men 

Chapter  Page 

XIII  Storekeepinq  Blunders  to  Avoid 117 

XIV  Winning  over  Your  Sales  Force 124 


LIST   OF   CHARTS 
Chart 

i  expense  items  your  mark-up  should  cover     ....  6 

ii  how  four  typical  stores  figured  expense      ....  18 

iii  m.^ximum  and  minimum  store  expenses 27 

IV  TAGS   THAT   KEEP   STOCK , 31 

V  HOW  TO  KNOW  TOtJR  PROFITS  DAILY 32 

VI  HOW   SHOP,  STORE   AND   OFFICE   EXPENSES   COMPARE     ...  35 

VII  A   CASH   AND   CHARGED   SALES   SUMMARY 40 

VIII  A   MONTHLY   SUMMARY   OF   PURCHASES          41 

IX  PLANNING   YOUR   STORE   FOR   MORE   SALES 44 

X  WHAT   BACKS    UP   YOUR   ADVERTISING 47 

XI  HOW   WINDOWS   DRAW   TRADE          51 

XII  RIGHT  ARRANGEMENT   OF   FIXTURES 65 

XIII  WRONG   ARRANGEMENT   OF   FIXTURES 67 

XIV  HOW  TO  MAKE  FIXTURES  SELL 68 

XV  HOW   TO   MAKE   CURVES   CHECK   SALES   SLUMPS 82 

XVI  TESTING   FOR   ERRORS   IN   STORE    MANAGEMENT          ....  116 

XVII  STOREKEEPING   BLUNDERS  THAT  HURT  PROFITS        .      .      .      .  119 


Sf 


Part  I 


FIGURING  YOUR  EXPENSES 
AND  PROFITS 


Face  the  Facts 

rpiFTEEN  years  it  takes  to  make  a  business 
-'■  man",  says  the  manager  of  a  great  store; 
"five  to  know  what  goods  and  clerk  hire  total* 
five  to  know  the  cost  to  keep  store;  five  to  recog- 
nize profit  and  stand  up  for  it." 

But  you  can  bridge  these  years — ^you  can 
stop  guessing  at  success.  While  your  compet- 
itors are  still  estimating  their  cost  to  sell,  you 
can  make  your  itemized  expense  sheet  show 
your  gain  on  every  line  you  handle. 

When  you  "guess  in"  the  dii^^^ence  between 
buying  and  sale  price,  you  "gae^s  In"  your 
profit.  When  you  gamble  on  Exvense,  you 
are  gambling  with  your  business  dfo. 

Paper  profits  are  no  insurance  for  tho  mer- 
chant who  keeps  his  expenses  in  the  dark  or 
fears  to  face  them. 

Turn  the  light  on  your  business!  Face  the 
facts ! 

Itemize  Expense,  and  make  your  price  to 
cover. 

Think  nothing  of  the  large  gross  profit,  for 
out  of  it  must  come  all  your  running  expenses. 
Know  your  cost  to  run  and  measure  your 
success  only  by  net  profit. 

tui  =.al 


hi: 


111 


EXPENSE  ITEMS  YOUR  MARK-UP 
SHOULD  COVER 


Expense  Items 

Often 

Overlooked 

and  How  to 

Charge  Them 


SeUiiig      _ 


t 


Education  of 
New  Salc»p*-oplc 


i  Number  Traiacd 


New  OrJcra 


r{ 


Chaiyc  M  Expense  uniil  Efficieat 


Figure  Number  of  New  Orders 


H       Charge  a^  Fxpensc  Cost  of  Securing        I 


Returned  Goods    — 


Figure  Number  of  Returns 


Charge  aa  Expense  Coat  of  Rehandling 


Include  in  Your  SeUing  Pnc 


Charge  aa  Advertising 


Extra  Delivery     _ 


Find  Cost  of  Each  Delivery 


Charge  the  Extras  as  Expense 


Opention-"     Own.A  Uhor 


Figure  at  Market  Rates 


Charge  as  Elxpense 


Bad  Accouots      ~ 


Figure  Yearly  Loss 


Charge  zs  Experue 
and  Improve  Credit  System 


*■  UOMC*  - 


rl 


Estimate  Losses  and  Thefts 


] 


Rent  of  Building 

-j        if  Owned  by     f- 

tbe  Retailer 


-J  Charge  to  CoAt  of  Merchandise  I 

-|  Figure  at  Market  Value  I 

-J  Charge  as  Expense 


: 


Interest  oo 
Investment 


Figure  at  Current  Rates 


Charge  to  Capital  Account 


DeprecifltioQ      — 


-j  Figure  on  Equipment  and  Stock  I 

Charge  to  Depreciation  Account  j 


Discount  oo 
Purchases 


Take  Maximum  Discounta 


Credit  to  Discount  Account 


CHART  I:     Overlook  an  expense  item  shown  here  and  your  net  profit  is 

cut  that  much — you  pay  the  difference.     You   mxist   make  your  selling 

price  to  cover  all  your  running  expenses  before  you  can  get  sound  profits 

and  figure  a  safe  mark-up 


■II 


:iii 


CHAPTER  I 
Fixing  Prices  to  Cover  Expenses 

APPLICATION  and  aptitude  made  a  young  man 
so  successful  as  a  hardware  clerk  that  he  started 
a  shop  of  his  own.  He  aiTanged  that  the  field  manager 
for  the  man  from  whom  he  bought  his  goods  should 
price  them  for  him.  Delayed  a  couple  of  days,  the  field 
manager  arrived  and  found  the  new  store  open,  buyers 
plentiful  and  the  youthful  owner  in  a  cheerful  mood. 

"Got  ahead  of  you  this  time,"  the  young  dealer  ex- 
plained. "Won't  have  to  bother  you.  My  goods  are 
marked — every  last  item — and  selling  like  cakes." 

"How  did  you  fi,gure  your  selling  prices'?" 

The  answer  was  characteristic  of  a  great  percentage  of 
the  men  who  guess  at  the  running  costs.  "A  friend  of 
mine  went  around  and  priced  everything  in  the  other 
stores.  Then  I  took  the  lowest  prices  on  each  article — 
and  marked  my  goods.    I  ought  to  get  plenty  of  trade." 

There  you  have  it — the  ' '  poor-house ' '  price  that  cleans 
out  more  business  than  any  other  form  of  mismanage- 
ment. 


To  fix  selling  -prices,  divide  last  year's  ex/pense  by 
sales.  Add  this  per  cent  to  your  iiet  profit  and  get 
when   selling,   this   sum  and  the  original  goods  cost. 


8  EXPENSES  AND  PROFITS 

The  same  lottery  is  going  on  in  nine  out  of  ten  retail 
businesses  every  day — business  after  business  is  operat- 
ing blindly;  sapping  not  the  public  pocketbook  but  its 
own  cash  drawer;  and  cutting  net  profits  because  it 
guesses  at  expense. 

Some  men  don't  know  all  the  items  of  expense;  others 
fail  to  record  them;  still  others  guess  at  some  of  them, 
"Wherever  an  item  is  overlooked  or  lost  and  not  charged 
in  with  the  prices  asked,  the  merchant  is  paying  for 
it  out  of  his  owTi  pocket.  Cost  to  run  is  as  legitimate 
an.  expense  as  the  lumber  in  a  chair;  the  starch  in  a 
collar;  the  wage  of  the  clerk  who  fits  your  shoe. 

There  is  small  chance  of  basic  cost  getting  away;  ma- 
terial and  labor  costs  are  apparent  and  recognized ;  the 
selling  price  is  based  on  prime  cost.  But  the  cost 
to  run  a  business — its  cost  of  living,  disregarding  ma- 
terial and  direct  labor  which  are  re-sold  to  make  income 
—is  vague.    Here  is  an  open  invitation  to  lose  items. 

Even  the  names  applied  to  these  items  show  its  unde- 
fined character.  Some  business  men  call  it  "burden"; 
others  designate  it  ' '  general  expense ' ' ;  still  others  style 
it  "non-productive  costs";  and  the  majority  colloquially 
name  it  "overhead."  The  title  is  vague  because  busi- 
ness men  have  not  thought  the  idea  out  clearly. 

Usually  unreliable  expense  percentages  can  be  traced 
to  one  or  more  of  five  causes: 

(1)  The  accounting  system  may  be  at  fault — the 
judgment  that  determines  how  such  expense  items  should 
be  charged  is  unsound. 

(2)  Often  a  store  manager,  facing   high  expenses. 

Figure  usual  interest  on  the  net  amount  of  your  total 
investment  at  the  beginning  of  your  business  year,  ex- 
clusive of  real  estate. 


SETTING  THE  PRICE  9 

•decides  to  drop  accounts  and  increase  business — hoping 
to  catch  up  with  expense. 

(3)  Sometimes,  not  bothering  to  figure  his  own  costs, 
a  storekeeper  adopts  a  competitor's  expense  as  his  own. 

(4)  Many  men,  thinking  they  know,  are  really  figur- 
ing on  a  false  "  rule-of-thumb  "  method. 

(5)  Some  merchants  even  seem  afraid  to  face  their 
costs;  they  don't  want  to  know. 

The  first  class  is  probably  the  most  numerous — the 
men  whose  prices  are  too  low  because  they  do  not  in- 
clude every  item,  charge  some  wrongly,  or  drop  others  to 
make  a  showing. 

A  Western  banker  took  a  laundry  for  debt.  He  put 
an  acquaintance  in  charge,  familiar  with  the  mechanical 
side.  At  the  end  of  the  first  month,  his  books  showed 
a  net  profit  of  three  hundred  dollars.  But  a  bank  and  a 
laundry  are  strikingly  different  from  the  standpoint  of 
expense.  The  bank  needs  no  heavy  depreciation  on 
equipment — the  laundry  grinds  off  a  layer  of  assets 
with  every  turn  of  the  power-drive. 

This  laundry  ran  for  six  months-  Then  the  wreck  of  a 
delivery  wagon  and  the  necessity  of  buying  a  new  ma- 
chine exhausted  the  cash  in  the  bank,  and  the  owner 
began  to  investigate.  The  system  of  accounting  had 
been  showing  as  profit  what  was  actually  expense, 
chargeable  as  maintenance,  depreciation,  bad  accounts, 
and  so  on — all  legitimate  items  of  expense  which  the 
manager  had  been  paying  out  of  his  employer's  pocket 
instead  of  charging  in  the  prices. 

It  is  common  for  a  merchant  to  say,  * '  I  can  get  around 

Figure  all  fixed  expense,  .inch  as  interest,  taxes,  insurance, 
water,  lights  or  fuel,  and  prorate  it  over  the  business  year 
in  properly  itemized  weekly  instalments. 


10  EXPENSES  AND  PROFITS 

those  high  operating  costs  somehow,"  and,  in  the  effort 
to  evade  percentages  which  he  knows  are  high,  to  sink 
deeper  and  deeper  into  imaginary  profits. 

"Increased  Volume"  Is  a  Deceptive  Rainhoiv  Unless 
Your  Mark-up  Is  Sound  and  Profitable 

A  selling  agency  manager  of  an  appliance  company 
found  his  profit  for  a  half  year  to  be  $2,200.  He  needed 
$2,800  more  to  get  the  required  $5,000  yearly  profit  and 
secure  his  bonus.  Although  he  knew  that  selling  costs 
were  high,  he  decided  that  the  best  way  to  secure  the 
profit  expected  was  to  crowd  his  men  for  a  bigger 
volume,  to  offer  a  little  more  to  customers,  and  push 
harder  for  business. 

He  did  not  figure  the  additional  expense  in  getting 
the  extra  business,  and  while  he  secured  the  gross  sales 
desired,  he  found  the  expense  had  paralleled  the  increase. 
Come-backs  from  hasty  sales,  additional  delivery  bills, 
and  money  spent  on  new  salesmen,  made  the  extra  sales 
cost  even  more  than  the  regular  business.  The  ever- 
present  shadow,  expense,  made  him  lose. 

This  is  one  of  the  serious  fallacies  common  to  many  a 
business.  If  your  store  is  not  making  a  profit  because  of 
high  expense,  merely  increasing  the  sales  will  not  act  as  a 
remedy.  You  cannot  increase  your  business  without  in- 
creasing your  cost.  Your  clerical  force  can  do  just  so 
much  work;  if  more  orders  are  secured,  more  men  must 
be  hired.  If  there  are  more  packages  to  deliver,  delivery 
costs  increase  in  proportion.  You  may  not  need  more 
department  heads,  but  as  business  increases,  one  man 

Figure  depreciation  on  all  goo^s  carried  over  for  which  you 
may  have  to  take  a  reduced  price  and  on  anything  deteriorat- 
ing or  shotting  wear  and  tear. 


SETTING  THE  PRICE  11 

adds  an  assistant,  another  a  clerk.  Somehow,  you  have 
to  pay  for  the  extra  work. 

One  man  found  that  a  gross  business  of  $180,000  estab- 
lished his  net  profit  at  ten  per  cent,  in  an  industry  where 
competition  was  strong  and  largest  sales  a  talking  point 
sought  by  all.  "Now,"  he  thought,  "I  can  get  the  ad- 
ditional trade  needed  to  put  me  at  the  top  by  adding 
this  ten  per  cent  net  tc  the  basic  cost  on  orders  from  new 
customers.  My  present  organization  can  handle  the  ad- 
ditional business." 

He  failed  to  make  a  distinction  between  the  cost  of  get- 
ting the  old  business  and  the  new,  and  his  profits 
dwindled  to  the  point  where  the  original  net  was  wiped 
out.  But  a  good  accounting  system  saved  him;  as  his 
cut  price  campaign  progressed,  he  discovered  that  his  net 
profit  was  falling  below  ten  per  cent.  A  little  study 
showed  him  that  expenses  had  gone  up.  He  quickly 
cui  ofi'  the  non-paying  business,  sought  a  different  point 
of  appeal  that  allowed  him  to  charge  the  higher  prices, 
and  covered  the  additional  cost  of  getting  new  business. 

"Ride-of  Thumb''  Methods  and  Guesses  Give 
Dangerous  and  Deceptive  Mark-ups 

Another  type  of  merchant  adopts  competitors'  figures. 
A  young  paper  box  maker  started  in  business  and  began 
to  figure  on  lots  for  large  users.  Contract  after  contract 
W*^nt  to  his  competitors.  Finally  he  lost  an  order  placed 
by  a  friend  of  his ;  he  was  able  to  ask  why. 

"The  price  was  lower,"  he  learned. 

Further  inquiry  showed  that  the  successful  concern 

figure  as  labor,  your  services  or  those  of  any  of  your  fiimily 
employed  in  the  business,  at  their  worth  to  others.  Charge 
'•our  expense  account  with  these  services. 


12  EXPENSES  AND  PROFITS 

was  paying  substantially  the  same  for  labor  and  ma- 
terial. 

"'It  must  be,  then,''  the  young  manufacturer  con- 
cluded, "that  I  am  figuring  my  overhead  wrong.  I 
know  it  must  be  less  than  these  other  follows' — I  haven't 
their  big  organization,  high  rent  or  the  expensive  selling 
metliods  they  use." 

He  guessed  at  what  his  running  expense  should  be; 
cut  his  price  to  fit  his  competitors' — and  lasted  only  as 
long  as  he  could  live  on  his  meager  capital  and  credit. 

A  good  worker  who  owned  several  patents  and  knew 
his  trade  thoroughly,  started  a  business  in  a  Western 
city.  Material  was  cheap ;  wages  low.  His  factory  oc- 
cupied an  old  building  at  a  nominal  rent.  Power  and 
heat  were  furnished  by  his  wastes.  He  thought  his  ex- 
penses must  be  below  the  average,  but  to  make  sure, 
charged  the  customary  trade  "overhead,"  ten  per  cent. 

The  plant  expanded.  But  this  blanket  overhead  per- 
centage stood.  Products  become  diversified ;  more  capital 
was  taken  in ;  a  considerable  line  of  credit  established  at 
a  local  bank.  Then  one  day  the  company's  balance  was 
wiped  out  by  a  judgment  in  a  casualty  suit  and  the  man- 
ager had  to  ask  an  additional  loan. 

Demanding  an  accounting,  the  banker  started  a  good 
cost  man  searching  for  the  real  figures.  It  was  found 
that  the  hypothetical  ten  per  cent  was  in  reality  eighteen 
and  one-half  per  cent — almost  double — and  had  been 
close  to  that  for  many  years.  This  man  had  been  paying 
half  his  running  expenses  out  of  his  own  pocket.  Fif- 
teen years,  he  and  his  business  wasted — victims  of  the 

Figure  sums  given  to  charities,  associations  and  like 
causes,  and  subscriptions  or  assessments.  Charge  them 
to  advertising  or  a  special  gift  account. 


SETTING  THE  PRICE  13 

ten  per  cent  fetish.  Seventy-five  per  cent  of  the  men  who 
annually  go  into  retail  business  fail  because  they  figure 
running  expenses  on  the  same  basis. 

Fixed    Overhead    Charges   Are    Dangerous    unless 
Frequently  Checked  with  Expenses 

Too  often  a  business  man  sets  a  fixed  overhead  on  ex- 
pense and  uses  this  as  the  basis  on  which  to  gauge  his 
prices — when  in  reality  he  has  not  investigated  to  see 
whether  it  is  correct  for  his  business  under  the  conditions 
to  be  met. 

The  tradition  of  ''charging  ten  per  cent  to  overhead 
expense ' '  has  ruined  more  businesses  than  lack  of  capital. 
It  does  more  to  cloud  the  understanding  of  costs  and  put 
a  business  on  an  insecure  basis  than  any  other  single 
factor. 

In  a  growing  city,  a  successful  grocery  business  was 
built  up  by  a  clever  man.  When  he  died  his  widow  made 
the  local  bank  trustee  and  went  away  to  live.  Profits 
continued  for  a  while,  grew  smaller  and  then  ceased. 
Finally  the  bank  notified  her  of  a  big  deficit.  Together, 
she  and  the  bank  investigated- 

The  store  manager  insisted  that  they  were  making 
money,  but  that  the  addition  of  new  equipment  was  re- 
sponsible for  the  cessation  of  profits.  It  was  found  that 
he  had  figured  his  direct  costs — ^such  as  purchases,  labor, 
advertising — correctly,  and  then  by  adding  twelve  per 
cent,  had  planned  to  get  more  business  by  cutting  prices. 

This  looked  safe  on  the  basis  of  twelve  per  cent  over- 
head^ but  an  expert  accountant  showed  that  he  had  not 

Figure  as  losses,  merchandise  sent  out  and  not  charged,  goods 
lost,  allowances  made  customers,  accounts  believed  worthless, 
cashier's  errors  and  unusual  collection  expenses. 


14  EXPENSES  AND  PROFITS 

charged  depreciation  on  equipment,  office  expenseit,  sup- 
plies, interest  on  the  investment  and  many  miscellaneous 
items  which,  all  together,  brought  the  running  expenses 
up  to  between  twenty-six  and  twenty-seven,  instead  of 
twelve,  per  cent. 

Here  was  a  manager,  supposed  to  be  competent,  charg- 
ing prices  for  goods  that  took  money  out  of  the  pockets 
of  his  employer  with  every  sale. 

Little  Items  Often  Overlooked  Amount  Frequently 
to  Sums  Which  Endanger  Your  Profits 

Often  the  little  items  of  seeming  "outside"  expense, 
which  are  in  reality  regular  running  costs,  amount  to  an 
important  sum  when  figured  on  a  long  time  basis. 

The  manager  of  the  boot  and  shoe  department  of  a 
"unit"  store  in  a  small  Eastern  city,  put  his  yearly  profit 
at  $1,500  in  a  talk  with  a  salesman  friend.  "And  this 
is  net,"  he  added,  "every  expense  figured  in." 

A  smartly  gowned  lady  interrupted  him  to  ask  for  a 
charity  subscription.  Without  hesitancy,  h^  handed  out 
a  five-dollar  bill. 

The  salesman,  accustomed  to  exact  accounting  in  his 
own  road  expenses,  inquired,  "to  what  do  you  charge  do- 
nations— to  advertising  ? ' ' 

"Oh,  I  don't  have  any  regular  account.  I  turn  lots 
of  'em  down,  of  course,  but  in  this  case  it's  good  business 
to  give.    It  comes  out  of  my  own  pocket  anyhow.  * ' 

The  answer  to  the  salesman's  next  question  showed 
that  these  donations  would  average  as  high  as  $150  a 
year.    He  rapidly  figured,  on  the  basis  of  ' '  show  me ' '  in 

Deduct  your  complete  expense  percentage  and  what  the  goods 
cost  you,  from  the  price  of  any  article  you  have  sold,  and  the 
result  shows  your  net  profit  on  the  sale. 


SETTING  THE  PRICE  15 

his  own  accounts,  that  "in  ten  years  you  pay  out  a 
profit  of  $1,500" — one  full  year's  profit  wiped  out  by 
not  putting  one  item  in  the  overhead. 

This  merchant  never  stopped  to  think  that  everything 
must  go  into  the  cost  of  doing  business — somewhere.  If 
it  is  not  included,  there  is  no  basis  on  which  to  add  it  to 
the  prices  of  the  goods.  These  items  are  not  always 
small. 

"My  expense  isn't  ten  per  cent.  I  know  I  am  making 
good  money,"  said  an  implement  dealer  who  objected 
strenuously  to  the  average  of  seventeen  to  twenty-two 
per  cent  suggested  by  his  association  as  a  proper  charge 
for  running  expense. 

The  association's  secretary  checked  over  the  items  of 
expense  carefully  and  found  that  the  dealer,  since  he 
owned  the  store,  charged  no  rent ;  that  he  figured  no  in- 
terest on  his  investment  and  no  depreciation  on  his  stock- 
The  dealer  explained  that  he  wasi  "leaving  the  profits  in 
the  business ; ' '  and  asked,  ' '  Why  should  I  charge  myself 
for  the  use  of  my  own  money  in  stock?"  All  he  will 
actually  have  in  his  business  in  five  years  will  be  a  run- 
down building,  out-of-date  machinery  and  some  uncol- 
lectible accounts. 

In  another  village,  a  retired  farmer  with  $5,000  in- 
vested in  a  vehicle  agency,  failed  to  charge  salaries 
against  his  labor  and  that  of  his  two  strapping  sons. 

"All  that  comes  in  profit,"  he  explained.  "I  don't 
have  to  pay  out  any  salaries. ' ' 

These  dealers  were  not  working  for  themselves,  but 
for  their  customers.    They  were  making  less  than  a  fair 

Go  over  carefully  the  selling  price  of  the  various  articles  you 
handle  and  see  where  you  stand  as  to  profits,  and  correct  sell- 
ing figures  if  necessary. 


16  EXPENSES  AND  PROFITS 

profit  and  could  last  only  until  overhead  charges  ate  up 
their  surpluses.  It  was  just  as  if  they  were  handing 
their  gootLs  to  customers  at  cost. 

There  is  a  type  of  man  whose  books  show  a  profit, 
who  has  been  drawing  dividends,  and  who,  therefore,  says, 
* '  Vfl\y  bother  ?  We  are  making  money.  For  fifteen  years 
we  have  made  all  the  way  from  six  to  sixteen  per  cent. 
"We  have  more  assets  than  ever.  "What  further  proof  do 
we  need  that  our  expense  figures  are  right?" 

This  merchant  is  as  much  a  plunger  as  any  of  his  fel- 
low retailers  in  the  other  classes.  He  may  know  his  total 
costs  and  his  total  profits,  but  he  doesn't  know  where  he 
makes  his  profit  or  where  the  expense  is  going.  Some  one 
department  or  line  of  goods  may  be  losing  money — which 
another  department  must  make  up  by  abnormal  profits. 
This  isn't  safe.  A  change  of  conditions  may  affect  the 
profitable  line  and  the  business  go  to  pieces  with  a  crash. 
Lack  of  definite  expense  knowledge  is  a  "blinder"  to 
the  retailer. 

Ask  the  manufacturer  what  his  pay  roll  or  department 
expense  bills  were  for  the  month  before ;  he  can  tell  you 
in  odd  pennies.  Ask  retailers  what  they  pay  for  this  or 
that  article  on  a  shelf;  they  know  to  the  fraction  of  a 
cent.  But  ask  these  retailers  the  total  of  running  ex« 
penses,  cost  of  sales  expense,  difference  between  costs  and 
selling  price,  items  into  which  the  cost  of  doing  business 
is  divided  and  their  amount;  above  all,  ask  them  what 
portion  of  their  gross  profit  is  actually  net — and  you 
will  wait  for  an  answer.  They  do  not  know  the  essen- 
tial of  progressive  retail  management) — the  cost  of  doing 
business. 


CHAPTER  II 

What  It  Should  Cost  You  to 
Keep  Store 

AFTER  twenty  years  in  business,  a  retail  firm  in  a 
Middle  Western  town  found  their  net  profits  on  the 
point  of  vanishing,  though  gross  sales  continued  to  in- 
crease. They  were  the  "big  store"  of  the  county,  hand- 
ling groceries,  hardware,  builders'  supplies  and  farm  im- 
plements. 

They  sold  at  wholesale  the  first  two  lines  to  smaller 
stores  in  addition  to  retailing  them,  but  kept  one  set  of 
books  which  made  no  distinction  between  the  wholesale 
and  retail  classes  of  trade.  Nor  was  it  thought  necessary 
to  separate  departments  until  their  dwindling  net  profits 
forced  an  investigation. 

Running  expenses  had  been  figured  at  fifteen  per  cent 
on  sales  for  years.  Yet  the  investigation  and  comparison 
of  sales  and  invoices  at  once  showed  the  average  '  *  mark- 
up" on  wholesale  groceries  to  be  only  eleven  per  cent 
over  first  cost,  and  on  hardware,  only  eighteen  per  cent. 
Competition  in  the  majority  of  cases  fixed  both  wholesale 
and  retail  prices,  and  through  handling  branded  and  ad- 
vertised goods,  the  prices  on  their  lines  were  nearly  all 
fixed  by  manufacturers. 

17 


18 


EXPENSES  AND  PROFITS 


HOW  EXPENSE  IS  DISTRIBUTED 


WHERE  THE  ANNUAL  BUSINESS  WAS 


$11,000 


Rent  _  _ |..$420 

Saliry  to  Self ^ 1  --'24. 

Salary  to  Help _ J...378. 

Advertising | 165. 

Heat  and  Light  1..  IJO. . 

Depreciation  on  Fixtures ...IfiO. 

Miscellaneous  .. 75.. 


Total  Expenses 


3.9<;; 

.1.5% 

.1.2% 

.1.5% 

.7% 


J840.J.  4.69 
.  832 
.688 
.  270 
.175 
.  80.. 
220 


.1.5^, 

.4% 

i.2';t 


,3,105 


SI. 200. 
..  900 
1,288 
.352 
...200. 
-.100. 
..  250 


[  8.7%  \ 

.  1J% 
...87ft. 
...47o.l 
- 1.0% 


Percentage  of  Expense , 

Gross  Profit 

Net  Profit 


$1,320. 


.  18% 
.30^4 
U%  I  $1,980 


17% 
.28% 
11% 


-17%. 
.26%. 


.$2,250 


CHART  II:  How  stores  representing  four  typical  classes  of  retail  shops  distribute 
their  expenses  is  here  shown.  Whether  you  are  keeping  store  in  country  or  city,  your 
business  fits  into  one  of  these  classes.  You  can  thus  compare  your  expenses  with  normal 

As  matters  stood,  two-thirds  of  their  stock  was  marked 
at  eleven  per  cent  above  invoice  cost,  plus  freight,  or  ac- 
tually four  per  cent  less  than  the  cost  of  the  goods  when 
delivered  to  a  customer.  While  the  question  of  how  long 
they  could  last  was  a  matter  of  simple  arithmetic,  ap- 
parently, inventories  and  bank  balances  showed  that  they 
were  actually  making  money. 

Then  they  discovered,  what  was  overlooked  at  first, 
that  it  cost  less  to  sell  at  wholesale  than  retail,  and  there- 
fore merchandise  sold  wholesale  at  eleven  per  cent  above 
first  cost  yielded  a  fair  profit  which  was  being  eaten  up 
by  the  growth  of  retail  departments  and  lines  that  were 
hard  to  move.  The  non-profitable  retail  business  had 
grown  faster  than  the  wholesale. 

Like  hundreds  of  other  stores  that  have  been  saved 
when  on  the  verge  of  failure,  a  careful  analysis  of  costs 
and  selling  conditions  and  a  definite  knowledge  of  * '  what 
it  costs  to  do  business"  had  to  come.    Three  things  were 


STOREKEEPING  COSTS 


19 


IN  SUCCESSFUL  RETAIL  STORES 


IN  A  METROPOLITAN  DEPARTMENT  STORE 


Rent 

Salaries 

Advertising 

Heat  Light  and  Power 

Alteration  and  Displays  (this  includes  depredation). 
Miscellaneous 


Deliver;  and  Equipment. 

Supplies _ 

Uwurance  and  Taxes 

General  Expense 

Shrinkage  on  Stocks 

Loss  on  Bad  Accooats  . . . 


.6.00% 

...25% 
.^.10% 

._.so% 
.xoo% 

....so% 


9.35% 


Total  Expenses  . 


6.00% 
.5.00% 
..3.1«% 
.3-00% 
.2.00% 
-  9.35% 


.28.45% 


Gross  Expense. 
Gross  Profit  ... 
Net  Profit 


.28.45% 
33.33   1/3% 
.4.88  1/3% 


figures  and  detect  your  storekeeping  errors.  If  the  figures  differ  widely,  your  net  profits 
are  probably  being  robbed  by  a  deceptive  mark-up  and  you  should  go  over  your  methods 
of  keeping  shop  and  figuring  costs.    Check  over  your  expense,  frequently  and  make  safe 

done  at  once : 

(1)  Groceries,  hardware  supplies  and  implements 
were  reco^ized  as  different  commodities — needing  vary- 
ing outlay  of  effort  and  expense  to  sell. 

(2)  Retail  and  wholesale  departments  were  separated 
and  new  percentages  of  cost  worked  out  to  cover  each 
department,  each  line. 

(3)  Classifications  were  worked  out  in  the  various 
lines  which  could  carry  maximum  advances  to  make  up 
for  necessary  minimums  elsewhere. 

Rent,  light,  heat,  taxes,  insurance,  clerk  hire,  delivery, 
shrinkage  of  stock,  depreciation  of  fixtures,  office  ex- 
penses, partners'  salaries,  and  all  the  other  items  that 
make  selling  expense,  were  for  the  first  time  included  to 
get  the  revised  percentages  on  the  cost  of  running  the 
business.    Profit  was  added — like  any  other  fixed  charge. 

It  was  hard  work  at  the  start  to  figure  how  particular 
items  affected  individual  departments  and  lines,  and  how 


20  EXPENSES  AND  PROFITS 

to  add  this  percentage  in  each  case.  But  once  on  a 
definite  basis — a  report  made  up  each  month  in  the  office 
— the  old  crude  way  of  guessing  seemed  like  a  nightmare. 
With  this  infonnation  at  hand  it  was  not  difficult  to  work 
out  a  new  sales  polic}' — to  push  hardest  on  the  lines 
and  departments  that  were  evidently  bringing  the  best 
profits,  to  see  that  "fixed  price"  articles,  carried  as  an 
accommodation,  ought  to  take  care  of  themselves. 

How  to  Figure  Riinmng  Expenses  Tlmt  Clear  the 
^Yay  for  a  Sound  Profit 

Every  successful  retailer  has  worked  out  some  plan 
to  show  his  running  expenses,  so  that  he  can  add  an  ex- 
pense percentage  to  invoice  cost  and  freight,  and  clear 
the  way  for  his  profit.  But,  as  in  the  case  of  this  firm,  a 
"blanket"  percentage — which  applies  to  all  purchases, 
excepting  only  those  that  provide  bargains,  maintain 
fixed  manufacturers'  prices,  or  meet  unusual  compe- 
tition— is  often  used.  This  is  one  of  the  greatest  sources 
of  failure,  because  operating  expenses  do  not  follow  an 
accepted  line  of  uniformity. 

In  the  big  city  stores,  where  customer  service  has  been 
developed  to  a  high  degree  of  perfection,  the  average 
operating  expense  often  reaches  twenty-eight  per  cent  of 
gross  sales.  In  stores  separated  from  these  only  by  the 
width  of  the  street  or  the  length  of  a  block,  with  lower 
rents  and  less  customer  service,  less  aisle  space,  a  smaller 
number  and  cheaper  character  of  clerks,  no  special  de- 
livery, no  store  policy  for  "returns,"  and  lacking  a  dozen 
other  "luxuries,"  this  percentage  of  cost  may  drop  five 
or  ten  per  cent. 

A  department  store  in  a  small  city,  with  an  annual 
business  of  $750,000,  spent  $112,500  in  one  year,  making 
its  running  expenses  fifteen  per  cent.    Across  the  street, 


STOREKEEPING  COSTS  21 

a  shoe  store  with  annual  gross  sales  of  $20,000  was  unable 
to  reduce  this  percentage  below  twenty-two  and  one-half 
per  cent,  while  in  a  Canadian  town  of  three  thousand,  a 
general  store  with  $30,000  annual  sales,  secured  a  run- 
ning expense  of  only  eight  per  cent. 

It  is  easy  to  see  that  there  is  a  big  variation  in  the 
selling  cost  and  running  expense  of  different  lines,  and 
that  a  "blanket"  percentage  on  running  costs  is  always 
dangerous.  It  is  equally  easy  to  understand  that  the 
character  of  the  store,  the  clientele  desired,  the  conse- 
quent service  and  policies  maintained,  all  enter  vitally 
into  the  cost  of  running  expenses. 

It  is  the  small  store  that  suffers  by  clinging  to  ac- 
counting methods  which  are  not  exact  for  its  particular 
condition.  It  is  the  small  dealer,  more  than  any  other, 
who  must  have  an  accounting  system  which  shows  how 
much  more  it  costs  to  handle  clothing  than  millinery,  or 
groceries  than  drugs,  and  why. 

What  Retailers  in  Country  and  City  Have  Found 
Their  Rent  Cost  Them 

Rental  is  one  of  the  first  big  items  in  the  expense 
column  of  any  retail  store.  While  this  is  a  problem  to 
some  extent,  and  the  specific  percentage  that  should  be 
devoted  to  it  is  variable,  it  is  a  constant  charge  and  other 
expenses  must  be  regulated  accordingly.  It  is  usually 
safe  to  figure,  however,  that  a  good  situation  and  high 
rental  are  more  economical  than  a  cheaper  and  inferior 
place,  because  of  the  increased  volume  of  sales  which  the 
valuable  location  will  bring. 

A  dry  goods  firm  in  a  small  southern  town  paid  $100  a 
month  for  a  three-story  frame  building,  35x100  feet. 
Their  sales  averaged  $150  a  day — which  brought  their 
rental  down  to  a  low  percentage-     Their  distance  from 


22  EXPENSES  AND  PROFITS 

the  shopping:  center  made  it  necessary  to  advertise  ex- 
tensively for  trade.  This  unusual  expenditure  made  up 
for  the  low  i-ental — excess  on  the  item  of  advertising 
should  often  be  made  to  balance  the  saving  on  rental. 
And  because  of  the  necessaiy  balance,  a  desirable  loca- 
tion may  often  be  the  better  investment. 

For  the  average  small  cit}^  retail  store,  four  per  cent 
is  usually  considered  a  safe  figure.  In  a  small  country 
store,  it  has  been  known  to  sink  with  safety  as  low  as  two 
per  cent. 

The  retailer  who  runs  a  department  store  in  a  small 
city  usually  figures  his  rental  close  to  six  or  seven  per 
cent.  In  the  case  of  the  department  store  in  a  large 
city,  rental  often  demands  between  four  and  five  per 
cent,  but  the  volume  of  sales  against  which  this  is  figured 
is  of  course  large. 

Careful  investigation  lias  shown  that  the  item  of  rent 
is  the  most  uniform  factor  in  expense,  whether  it  be  in 
the  operating  expenses  of  the  village  shop  or  the  city 
department  store. 

Why  It  Is  Important  to  Get  a  Ratio  Between.  Gross 
Sales  and  Your  Pay  Roll 

Perhaps  the  second  important  factor  in  the  cost  of 
running  a  store  is  the  pay  roll.  Clerk  hire  fluctuates 
from  season  to  season,  is  usually  governed  by  the  demand 
for  help,  but  often  misses  this  mark  and  results  in  con- 
siderable waste. 

There  should  be  a  constant  relation  between  sales  and 
salaries.  Few  merchants  realize  this.  A  storekeeper 
often  pays  a  clerk  in  the  dress-goods  department  fifteen 
or  eighteen  dollars  a  week — because  he  makes  a  big  book 
on  Saturdays,  though  does  little  business  other  days — 
and  hesitates  at  six  dollars  a  week  for  a  bright  young 


STOREKEEPING  COSTS  23 

girl  in  the  notion  department,  who  does  a  fair  amount  of 
business  every  day.  To  some  extent  this  is  logical,  for 
notions  carry  slight  profits.  Almost  invariably  the  rule 
should  be  to  base  salaries  on  the  value  of  individual 
sales. 

Well  conducted  stores  figure  that  their  salesmen  will 
cost  no  more  than  five  or  six  per*  cent,  and  saleswomen 
not  more  than  three  or  four  per  cent,  of  their  sales.  One 
way  to  assure  this  is  to  hold  clerks  to  this  standard. 
Sometimes  in  the  larger  stores,  salespeople  are  put  on 
commission  or  given  bonuses. 

How    to    Plan    Your    Advertising    Outlay    within 
Reasonable  Limits  and  Still  Meet  Competition 

The  keener  the  competition,  the  more  actively  a  re- 
tailer must  advertise.  Individual  needs  must  be  consid- 
ered here.  Local  conditions  also  enter  into  the  prob- 
lem. 

A  New  England  merchant  did  an  annual  business  of 
$40,000  and  spent  $300  in  advertising.  Another  appro- 
priated $1,200  and  barely  made  the  same  turnover.  A 
third  found  his  advertising  cost  him  $1,000,  while  his 
sales  only  reached  $11,000.  It  is  apparent  that  here  is 
a  question  for  study. 

A  single  line  or  the  entire  business  can  profit  by  a 
certain  amount  of  publicity.  To  go  beyond  that  point  is 
clearly  wasteful. 

Observation  and  analysis  will  show  the  point  where 
advertising  ceases  to  be  a  good  investment.  This  is  a 
law  of  diminishing  returns — as  yet  little  appreciated. 

A  dealer  in  the  Northwest,  with  a  healthy  business 
for  a  small  city,  had  sales  of  $13,500  in  November  and 
$14,750  in  October — with  profits  respectively  of  $1,368 
and  $1,445,  or  about  ten  per  cent  of  the  sales. 


24  EXPENSES  AND  PROFITS 

The  dealer  distributed  charges  for  this  advertising 
among  the  dilTereut  departments  for  each  daj'-  during 
October  and  November ;  then  struck  an  average  on  vrhich 
to  base  the  division  of  his  appropriation : 

Cloaks  and  suits  18% 

Notions 18% 

Men's  clothing 16% 

Dress  goods,  silks,  etc 13% 

Shoes    12% 

Millinery   7% 

Groceries   6% 

Other  departments    10% 


100% 


To  test  these  figures,  he  took  similar  averages  for 
normal  months  in  previous  years — then  planned  each 
month's  advertising  in  advance  on  a  basis  of  profit  and 
made  it  a  point  never  to  go  beyond  these  tested  publicity 
figures. 

Many  stores  do  a  satisfactory  business  without  exten- 
sive advertising.  The  appropriation  of  ten  small  stores 
scattered  throughout  the  West,  doing  an  annual  busi- 
ness of  from  twelve  to  fifty  thousand  dollars,  averages 
"two  per  cent.  Five  other  retail  houses,  each  doing  in  the 
neighborhood  of  $40,000,  keep  their  appropriation  around 
three  per  cent.  A  report,  covering  a  period  of  fifteen 
years,  showed  advertising  appropriations  for  one  firm 
running  as  low  as  one  and  a  half  per  cent,  while  tile 
high  water  mark  was  three  and  a  half  per  cent.  One 
year  this  organization  did  a  business  of  $119,675  on  an 
advertising  expenditure  of  $4,188. 

Whether  in  the  country  or  in  the  city,  the  newspaper 
advertising  appropriation  for  the  average  store  has  been 
found  to  most  profitably  run  about  three  per  cent. 


STOREKEEPING  COSTS  25 

Insurance  and  taxes  are  also  governing  elements  in 
selling  cost.  Most  business  men  insure  their  stock  to  the 
limit  allowed  by  the  fire  line  companies.  A  small  New 
York  store  pays  $13,275  for  rent,  $9,750  for  labor,  and 
$8,912  for  insurance.  One  Western  firm  that  sets  aside 
annually  $4,000  for  advertising,  fixes  insurance  at  $6,000. 
The  common  cost  ranges  between  one  and  two  per  cent 
of  the  sales,  while  the  small-town  general  store  may  often 
safely  run  as  low  as  six-tenths  per  cent. 

Freight  charges  and  cartage  are  usually  added  at 
once  to  the  invoice  cost  of  merchandise.  While  it  is 
difficult  to  establish  a  fixed  percentage  on  this  item 
because  of  the  varying  conditions  in  different  classes  of 
business  and  at  varied  locations,  an  investigation  of  small 
general  stores  in  the  country  showed  that  they  would 
average  between  five-tenths  and  thirty-five  hundredths 
per  cent.  A  similar  investigation  among  city  stores, 
doing  a  business  around  $100,000,  showed  a  percentage 
that  ran  close  to  three-tentlis  per  cent. 

Heat,  light,  power  and  office  expenses  are  often 
charged  under  the  head  of  ' '  incidentals, ' '  although  many 
of  the  more  progressive  merchants  are  beginning  to 
separate  office  expenses  relative  to  the  office  work  that 
is  lost  sight  of  when  this  item  is  not  considered  by 
itself.  Heat,  light  and  power  have  been  found  to 
average  between  seven-tenths  per  cent  and  one  and  one- 
tenth  per  cent — the  smaller  percentage  applying  to 
stores  with  sales  running  between  $15,000  and  $20,000 
annually  and  located  in  the  country.  The  larger  figure 
especially  applies  to  city  stores  where  better  lighting  is 
used  and  power  needed  for  various  devices. 

If  the  office  expenses  include  supplies  of  all  kinds, 
postage,  stationery,  printing,  and  the  like,  as  well  as 
bad  accounts,  and  the  office  force  wage,  this  item,  should 


26  EXPENSES  AND  PROFITS 

run  close  to  two  per  cent,  although  in  a  city  store  with 
gross  sales  averaging  about  $85,000  annually,  where 
careful  accounting  systems  and  daily  sales  and  cost 
records  are  maintained,  this  item  fluctuated  around  two 
and  eight-tentlis  per  cent. 

Delivery  is  still  another  item  that  depends  largely 
upon  the  policy  of  the  store.  As  a  rule,  the  average  for 
a  city  store  will  approach  five-tenths  per  cent,  while 
country  store  delivery  will,  because  of  the  greatly  de- 
creased amount  of  merchandise  handled  and  the  less 
perfect  facilities,  often  average  about  two  per  cent. 
However,  delivery  charges  range  anywhere  between  five 
and  ten  cents  per  package — this  item  being  susceptible 
to  material  reduction  through  the  use  of  motors,  motor- 
cycles and  other  modem  equipment.  Salaries  and  wages 
of  the  delivery  force  are  usually  included  in  this 
amount. 

There  are  a  number  of  other  items  often  overlooked, 
or  merely  covered  by  a  blanket  ' '  miscellaneous. ' '  These 
usually  include  depreciation  of  equipment;  interest  on 
the  capital  invested ;  the  salary  of  the  owner  or  partners, 
carried  as  separate  ledger  accounts;  and  provisions  to 
cover  theft. 

Each  of  these  items  is  important — as  depreciation 
alone  will  average  between  one-half  and  two  per  cent, 
according  to  whether  the  store  is  in  the  country  or  in 
the  city,  the  higher  percentage,  of  course,  applying  to 
the  first-cla.ss  city  store  with  modem  equipment.  The 
interest  on  investment  for  the  average  well  conducted 
store  in  the  country  ran  close  to  eight-tenths  per  cent, 
while  it  ranged  up  to  nearly  two  per  cent  for  the  small 
city  store.  By  methods  of  testing  and  comparison,  it 
has  been  found  that  the  more  successful  owners  charge 
their  salary  at  from  one  and  two-tenths  to  one  and  one- 


STOREKEEPING  COSTS 


27 


half  per  cent,  though  under  one  per  cent  is  considered 
liberal  in  department  stores  with  a  large  annual  tum- 


HOWMAIN  EXPENSE  ITEMS  RUN 


GROSS  SALES 


GROSS  SALES 


Stmttaple a57,- 

tuet —  .Ki~. 

Ail««tidi>E _.  t%~. 

Oelivefica ».•% — 

HMt  LlKht  lad  Power  —.7%^ 
Office  Espeiue  uuS..„  2 
SuppBe* 

DeprecUcioQ  . _ _.  . 

CntereitooCepiti] _«%  1 

latvraiica  uuj  Texce 

SeluT  of  Owner Ll%  I 


CHART  III:    These  maximum  and  minimum  percentages  are  the  extremes  between 
which  the  wise  retailer  holds  his  cost  to  do  business.     The  two  large  squares  represent 
gross  sales.     Each  oblong  represents  ten  per  cent  of  this  sales  total,  and  the  black  por- 
tion shows  the  percentage  of  gross  sales  usually  taken  by  the  main  expense  items 


over.  The  item  of  "miscellaneous  expenses,"  after  these 
various  "incidentals"  have  been  segregated,  will  still 
run  to  an  important  figure. 

How  to  FiTid  a  Safe  and  Healthy  Percentage  of 
Expense  for  Your  Business 

A  general  store  in  a  small  city,  with  a  business  of 
about  $30,000,  found  its  odds  and  ends  of  expense 
averaged  about  one  and  six-tenths  per  cent,  while  a  de- 
partment store  in  the  same  city,  with  a  turnover  five 
times  a-s  large,  placed  its  miscellaneous  expense  average 
close  to  five-tenths  per  cent. 

A  department  store  in  a  small  Western  town  did  a 
business  of  $143,072.  The  cost  price  of  the  merchandise 
sold  during  this  period  amounted  to  $106,058,  leaving 
a  healthy  gross  profit  of  $37,014,  or  a  shade  over  twenty- 
six  per  cent.  The  operating  expenses  of  the  business 
footed  up  to  $29,627. 


28  EXPENSES  AND  TROPITS 

The  net  profit  for  the  year  was,  therefore,  a  little  over 
five  per  cent  of  the  sales,  or  $7,387.  Inasmuch  as  the 
proprietor  provided  liimself  with  a  liberal  drawing  ac- 
count, the  showing  does  not  seem  to  be  unfavorable. 
While  no  provision  seems  to  have  been  made  for  interest 
on  the  investment,  advertising  and  clerk  liire  could  prob- 
ably be  safely  cut  sufficiently  to  cover  this  omission. 

A  more  careful  inspection  and  analysis  of  the  various 
items  on  this  store's  expense  sheet  would  probably  have 
shown  some  waste.  In  every  kind  of  retail  business  the 
percentage  of  cost  for  running  the  business,  which 
should  be  taken  care  of  in  the  selling  price,  is  fairly 
definite.  Any  decided  variation  on  either  side  of  this 
standard,  when  allowance  has  been  made  for  the  chang- 
ing factors  individual  to  every  business,  means  that  the 
basis  of  figuring  is  wrong,  that  some  link  in  the  ex- 
pense chain  is  weak.  Wrong  figuring  and  wobbly  ex- 
pense percentages  are  connnereial  danger  signals. 


Protect  Your  Mark-up 

THE  only  excuse  for  a  price  on  goods 
that  does  not  include  the  cost, 
sales  expense  and  the  proper  percent- 
age of  running  expense,  is  to  dispose 
of  dead  stock  because  it  is  store-worn 
or  out-of-date,  or  to  use  the  low  price 
as  a  leader. 


CHAPTER  III 
Where  to  Reduce  Expenses 

OVER  a  thousand  retail  sales  a  day  are  made  in  a 
small  shop,  only  forty  feet  square — a  volume  of 
business  that  could  be  handled  profitably  only  by  a  scien- 
tific arrangement  for  cheeking  up  stock  to  keep  it  re- 
plenished just  enough  to  meet  the  demands.  A  small 
shoe  store  does  the  business  of  the  average  shop  several 
times  its  size  by  simply  maintaining  the  maximum  var- 
iety of  stock  on  hand  in  minimum  quantities  and  re- 
plenishing supplies  promptly  as  goods  leave  the  store. 

Always  to  have  on  tap  a  clean  and  orderly  arranged 
stock  of  supplies,  whether  for  the  office  or  the  store, 
though  necessary  for  right  stock  keeping,  is  a  matter  of 
less  importance  than  having  enough  and  no  more. 

Disregard  of  this  fact  is  one  of  the  biggest  sources  of 
waste  in  a  retail  store.  Interest  on  every  penny  invested 
in  more  than  a  reasonable  supply  of  any  one  item — just 
as  paying  too  high  a  rental  or  making  too  big  an  adver- 
tising appropriation  or  allowing  too  high  salaries — is  a 
direct  drain  on  net  profits. 

The  right  quantity  must,  of  course,  take  into  con- 
sideration any  ultimate  advantage  of  price  fluctuations, 
"quantity"  purchases  and  the  increased  eost  of  handling 

29 


"30  EXPENSES  AND  PROFITS 

small  orclei*s,  as  well  as  interest  and  storage  on  large 
shipments. 

Each  of  more  than  a  hundred  retail  shoe  stores 
owned  by  one  company  pays  maximum  net  profits 
chietly  because  a  stoekkeeping  system  is  used  that  solves 
the  "right  quantity"  problem.  These  stores  are  first 
stocked  as  nearly  as  possible  with  one  month's  supply. 
Then  frequent  small  shipments  keep  up  the  stocks. 

A  very  simple  system  takes  care  of  shipments.  A 
ticket,  giving  the  style,  leather,  width,  length,  stock 
number  and  price,  placed  inside  each  box  of  shoes,  is 
taken  from  the  box  at  the  time  of  sale  and  sent  to  the 
cashier.  These  tickets  then  go  to  the  manager  and  act 
as  a  guide  to  the  day's  order  from  the  factory. 

The  information  given  by  the  ticket  is  indicated  in 
numbers,  figures  and  trade  names.  In  the  example  re- 
produced (Chart  IV),  ''bump"  gives  the  style;  "50 
Russia,"  the  last  and  material;  "3  Foxed  Blue,"  a  de- 
scription ;  and  ' '  731, ' '  the  stock  number.  ' '  9277 ' '  is  the 
pair  number  and  enables  the  salesman  to  match  up 
rights  and  lefts. 

As  a  result,  customers  seldom  fail  to  get  their  fit  in 
any  style,  notwithstanding  the  fact  that  the  quantity  of 
stock  is  always  down  to  the  smallest  possible  investment 
— saving  not  only  the  interest  on  money  invested  in 
over-stocks,  but  also  the  rental  on  expensive  store  space. 

]\Iany  small  stores  may  use  a  similar  system  to  keep 
a  trustworthy  account  of  sales — an  accurate  description 
of  the  item  on  the  duplicate  sales  check  or  on  the  price 
ticket,  these  tickets  to  be  assorted  and  recorded  as  a 
guide  to  future  purchases.  The  same  slips  also  offer  a 
cheek  for  the  record  of  stock  on  hand,  if  such  a  record  is 
kept,  thus  forming  the  basis  of  a  permanent  stock- 
keeping  system  that  cuts  down  excessive  cost  on  the  items 


:WHERE  TO  CUT  COSTS  31 

of  stock  and  rental.     They  should  show  the  lines  from 
which  the  sales  are  made. 

How  a  Progressive  Haberdasher  Keeps  Store  ivith 
Only  One  Day's  Supply 

A  well  known  shirt  company  has  found  it  possible  to 
operate  in  the  best  city  locations  without  running  the 
item  of  rental  to  an  excessive  fig^ure,  by  a  similar  plan. 

Only  one  day's  quantity  of 
each  item  is  placed  on  sale  at  a 
time.  When  the  last  of  each  item 
is  reached,  the  clerk  fills  out  a 
special  order  blank  for  another 
day 's  supply,  which  is  brought  in 
from  a  surplus!  stock  stored  at 
an  inexpensive  stockroom  in  an- 
other building.  The  same  system 
is  followed  in  the  surplus  stock- 


-'9277 , 
Bump 

SftRiiSsia    ■- 
3  Foxed  Blue 

'    -■  $3:85 


room,  where  the  supply  of  stock     chart  iv:  This  little  tag  is 

the   basis   of  a  money-making 

is    carried    for    but    two    weeks  shoe  stock  system 

ahead — orders    going    in    to    the 
manufacturers  only  as  the  amounts  get  low. 

This  same  scheme  not  only  cute  down  the  item  of 
rent,  but  also  of  clerk  hire.  A  small  sales  room  requires 
fewer  clerks  than  a  large  one,  while  the  total  amount  of 
sales  is  comparatively  greater  for  each  clerk. 

Saving  money  by  keeping  just  enough  stock  to  meet  a 
reasonable  demand  for  the  shortest  convenient  period  of 
time,  is  a  scheme  that  comes  within  the  province  of  all 
kinds  of  retail  stores  where  any  number  of  lines  of 
goods  are  carried. 

A  Western  retailer  has  found  that  it  is  possible  to  con- 
trol both  costs  and  sales  by  means  of  a  weekly  "profit 
and  loss"  schedule. 


32 


EXPENSES  AND  PROFITS 


This  embraces  itemized  department  statements,  which 
give  statistics  for ,  comparison  and  tabulated  reports 
that  offer  immediate  warning  of  appreciable  drops  in 
sales  or  marked  increases  in  expenses. 

These  statistics  first  offer  a  standard  which  can  be  fol- 
lowed at  different  periods  of  the  year  and  under  special 
conditions.  Then  any  variation  from  this  standard  is 
clearly  noticeable  and  action  can  be  taken  before  any  im- 
portant loss  is  sustained. 

A  Southern  retailer,  using  this  weekly  analysis  of  the 
store's  business,  was  able  to  reduce  his  problem  of  buy- 
ing and  selling  to  a  mathematical  basis. 

lie  allowed  sales  to  govern  the  purchases,  though  the 
volume  was  regularly  swelled  by  forced  price-reductions, 
which  spelled,  of  course,  a  diminution  in  profits. 

For  instance,  in  January  land  February,  the  two 
months  in  which  spring  buying  is  done,  purchases  ran 
high,  while  in  July,  one  of  the  quiet  months,  they  were, 
on  the  other  hand,  low.  Each  of  these  months  showed  a 
well  defined  percentage  of  the  year's  total  sales  as  a  guide, 
while  during  the  months  of  March,  April  and  May  the 


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CHART  V:  Up-to-the-minute  figures  check  on  hidden  expenses,  give  you  the  pulse  of 
your  business  and  put  your  credit  on  a  firm  foundation.  A  progressive  retailer  gets  daily 
figures  by  classifying  his  expenses  as  here  shown.    It  is  only  necessary  to  prorate  your 


WHERE  TO  CUT  COSTS 


33 


same  plan  of  analysis  showed  that  sales  might  be  ex- 
pected to  out-distance  purchases  by  a  definite  margin. 
So  erratic  temperaments  and  personal  opinions  can  be 
entirely  eliminated  in  the  matter  of  sales,  purchases  and 
expenses,  and  a  safe  basis  used  as  a  check. 

Cuts   in   the  Elusive   Overhead  Follow   Watching 
These  Small  Items 

By  removing  its  shipping  department  and  stock  rooms 
from  a  skyscraper  in  Eighteenth  Street,  in  one  of  New 
York's  danger  zones,  a  large  mercantile  house,  with  con- 
siderable wholesale  business,  was  able  to  effect  a  marked 
saving  in  insurance  rates  when  a  model  loft  in  South 
Brooklyn  was  taken  for  this  purpose  In  the  new  loca- 
tion the  conflagration  risk  was  at  a  minimum  and  the 
insurance  rate  dropped  from  fifty  cents  to  twenty-two 
and  one-half  cents  per  hundred. 

Many  stores  have  added  fire-proof  ceilings  and  a 
sprinkler  system  and  so  reduced  insurance  rates  to  a 
considerable  extent.  The  same  opportunity  is  open  to 
the  majority  of  retail   concerns,  in  the  city  or  country. 


EXPENSE 

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fixed  charges  and  add  them  to  your  daily  expenses.  The  gross  profits  caa  easily  be  fig- 
ured at  the  same  time  and  arranged  to  give  weekly  and  monthly  totals.  The  returns 
are  subtracted  from  the  gross  sales  to  secure  the  net  sales,  and  hx  your  profit  and  loss 


34  EXPENSES  AND  PROFITS 

By  borrowing  from  the  bank  and  discounting  all 
orders,  a.  small  retail  store  in  the  country  was  able  to 
reduce  the  interest  on  necessary  investments  to  an  im- 
portant extent.  Wliile  this  is  one  of  the  small  miscel- 
laneous items,  it  is  well  worth  considering.  It  is  usually 
possible  to  borrow  from  the  bank  at  the  annual  rate  of 
six  per  cent  or  less,  while  the  discount  on  purchases 
usually  amounts  to  about  two  per  cent  a  month,  or 
twenty-four  per  cent  a  year. 

The  delivery  expense  is  another  item  which  may  often 
fluctuate  decidedly.  A  grocer  in  the  suburbs  of  a  large 
city  found  that  his  delivery  costs  were  running  as  high 
as  two  and  a  half  and  three  per  cent  of  his  sales.  An  in- 
vestigation showed  that  the  same  territory  was  being 
covered  two  and  three  times  a  day  by  an  inefficient 
method  of  routing  the  wagons  and  through  the  store's 
policy  of  delivering  direct  on  rush  orders. 

By  carefully  routing  his  w^agons,  making  two  regular 
deliveries  a  day  and  using  a  motorcycle  to  handle  special 
deliveries,  this  grocer  w-as  able  to  cut  this  percentage 
below  one  and  a  half  per  cent. 

Another  retailer  whose  deliveries  naturally  divided 
themselves  into  two  classes — those  which  went  to  cus- 
tomers within  a  radius  of  two  miles  and  those  which 
must  be  delivered  a  distance  of  four  and  six  miles — 
found  that  his  delivery  costs  were  running  unusually 
high  because  of  the  time  required  in  making  the  long 
distance  deliveries  by  wagon. 

He  purchased  a  motor  truck  and  started  it  on  the 
long  distance  work,  where  speed  was  especially  desired 
and  stops  infrequent,  and  left  the  nearby  delivery  work 
to  the  horses  and  wagons.  The  result  was  a  decrease 
by  half  in  the  percentage  of  cost. 

The  item  of  advertising  is  another  expense  that  de- 


WHERE   TO  CUT  COSTS 


35 


mands  close  watching.  A  furniture  store  discovered 
that  by  hiring"  a  man  who  had  been  especially  trained  in 
window  trimming  and  who  could  devote  half  of  his  time 


TYPICAL  SHOP  AND  OFFICE  EXPENSE  ITEMS 

Expense  Items 

A  Plumber's  Shop 

$20,000 

Yearly  Volume 

A  Retail  Shoe  Store 

$196,000 

Yearly  Volume 

A  Real  Estate  Office 

$100,000 

Working  Capital 

Owners 

(Admioistrative)  Salary 

$   1300 

00 

$    2500 

00 

$     8664 

00 

Pay  Roll 

516 

00 

22384 

00 

19760 

04 

Rent,  Including  Heat 

270 

00 

8500 

00 

2100 

00 

Delivery,  Including  Salaries 

Livery  and  Chauffcu.s 

Salaries  in  Case  ol 

Real  Estate  Office 

700 

00 

1990 

60 

9  7  3'2 

84 

Light 

18 

10 

490 

1  6 

233 

40 

Postage  and  Car  Fare 

1  25 

20 

102 

10 

718 

20 

Advertising 

1  0 

1  0 

7000 

00 

5909 

52 

Insurance 

25 

00 

431 

30 

1  20 

00 

Taxes 

30 

00 

482 

12 

1  200 

00 

Contributions  and  Dues 

24 

00 

150 

00 

60 

00 

Interest  on  Capital 

120 

00 

25  0  0 

00 

3000 

00 

Telephone 

72 

10 

81 

20 

564 

60 

Misc.  Supplies;  Extra 
and  Incidental  Expense 

515 

40 

1743 

03 

4789 

76 

Interest  and  Discount 
on  Bank  Loans 

1000 

00 

Stock  Depreciation 
and  Reductions 

250 

00 

5240 

10 

Interest  and 
Depreciation  on  Fixtures 

10 

00 

500 

00 

100 

00 

Total  Expense 

i  3985 

90 

$  55094 

61 

$  56952 

36 

CHART  VI:     The  actual  expenses  of  a  shop,  a  retail  store  and  an  office  are  classified 

here.    Whether  you  are  selling  goods  or  service,  you  can  decide  whether  your  cost  to  do 

business  is  excessive  by  comparing  it  with  these  norma  1  figures 

to  the  windows  and  advertisements  in  addition  to  clerk- 
ing in  the  store,  it  was  able  to  decrease  the  newspaper 
advertising  appropriation  by  two-thirds. 

While  the  added  salary  of  the  clerk  was  a  small  extra 


36  EXPENSES  AND  PROFITS 

expoiiso,  the  saving  in  the  big  item — advertising — was 
sufiieiont  to  reduce  this  cost  from  three  and  nine-tenths 
per  cent  of  sales  to  about  two  per  cent. 

The  window  dispLay  is  vahiabk^  in  the  small  town  as 
well  as  in  the  city,  and  very  often  if  it  is  efficiently 
handled  and  the  location  unusually  desirable,  it  can  be 
made  to  care  for  the  biggest  part  of  the  advertising. 

A  laundry  in  a  small  city  was  able  to  decrease  depre- 
ciation on  equipment — an  item  often  covered  in  miscel- 
laneous expense — by  placing  a  blank  report  slip  within 
reach  of  all  employes,  on  which  they  could  note  any 
needed  repairs.  This  lengthened  the  life  of  the  ma- 
chinery and  delivery  equipment  sufficiently  to  decrease 
the  depreciation  item  nearly  one  per  cent. 

A  similar  scheme  used  in  the  office  of  a  dry  goods 
store  took  care  of  supplies  of  printed  forms,  stationery, 
postage,  pencils  and  typewriting  supplies,  and  prevented 
waste  and  over-stocking  of  these  miscellaneous  items. 
Each  member  of  the  office  force  was  required  to  turn  in 
a  weekly  slip  reporting  the  supplies  he  needed — the 
result  was  a  saving  of  three-tenths  per  cent. 

Wherever  there  is  an  excess  in  an  expense  item,  it 
is  usually  discovered  through  careful  analysis  and  by 
watching  the  business.  Frequent  statements  that  in- 
clude every  item  of  running  expense  are  the  safe  way 
to  locate  abnormal  expenses.  Once  known  there  are  usu- 
ally a  number  of  ways  for  meeting  the  difficulty  and  get- 
ting the  expense  down  to  normal. 


CHAPTER  IV 
How  to  Reckon  and  Watch  Profits 


MANUFACTURING,  wholesale  and  jobbing  houses 
usually  know  the  exact  profits  that  they  realize 
on  sales  from  day  to  day.  As  a  rule,  retail  merchants 
largely  base  their  estimates  of  profits  on  their  experi- 
ence during  past  years — only  to  find  that  in  many  in- 
stances when  the  annual  or  semi-annual  inventory  is 
taken  the  expected  profits  in  some  mysterious  way  have 
dwindled. 

Two  factors  to  determine  the  amount  of  gross  profit 
that  may  be  marked  on  any  article  are  competition  and 
expense.  If  competition  is  not  too  great,  selling  prices 
may  be  gradually  raised  until  the  mark-up  safely  ex- 
ceeds the  percentage  of  selling  expense.  Where  com- 
petition is  keen,  the  safest  remedy  lies  in  an  increased 
volume  of  business  at  a  lower  profit. 

An  important  step  is  to  keep  a  record  of  the  amount 
of  the  selling  price  that  is  lost  by  "mark-downs."  For 
this  purpose  a  form  is  often  provided  on  which  is 
recorded  the  quantity,  description,  selling  price  before 
reduced,  the  reduced  price,  and  the  extended  difi^erence. 
By  subtracting  this  difference  from  the  original  selling 
value,  the  net  gain  on  the  transaction  and  the  percentage 

37 


'38  EXPENSES  AND  PROFITS 

of  profit  may  be  determined.  This  record  is  reported  to 
the  ofiSce  each  week. 

The  amount  of  these  reductions  is  then  added  to  the 
actual  sales  of  the  department  for  the  corresponding 
period  and  the  result  is  the  original  selling  value  of  the 
merchandise  sold.  If  the  selling  price  mark-up  on  the 
merchandise  averages  thirty-three  and  one-third  per 
cent  more  than  the  cost,  then,  of  course,  by  deducting 
thirty-three  and  one-third  per  cent  from  the  original 
selling  value,  the  cost  value  is  obtained.  If,  in  turn,  this 
amount  is  deducted  from  the  actual  sales,  the  exact 
amount  of  gross  profit  is  secured. 

The  percentage  of  gross  profit  for  the  week  is  ob- 
tained by  dividing  this  amount  by  the  sales.  The  loss 
or  gain  is  measured  by  the  margin  by  which  this  profit 
exceeds  or  falls  short  of  the  cost  of  doing  business. 
Here  is  a  specific  example  that  shows  the  method  by 
which  the  difference  between  cost  and  value  of  the  goods 
and  the  gross  profit,  is  determined: 

Sales  for  the  period   51,525 

Reductions  224 

Original  selling  value  1,749 

Less  331/3  per  cent 583 

Cost  value  $1,166 

Difference  between  cost  value  and  actual  sales, 

or  gross  profit   359 

Percentage  of  gross  profit 23%% 

Then,  if  it  costs,  say  twenty-four  per  cent,  to  operate 
this  department,  the  loss  of  the  week  would  be  one-half 
per  cent,  or  $7.12.  On  the  other  hand,  if  no  reductions 
had  been  made  and  the  cost  per  cent  to  operate  remained 
the  same,  the  gross  profit  would  have  been  thirty-three 


RULES  FOR  MARKING  UP  39 

and  one-third  per  cent  and  the  net  profit  $163.24.  It 
will  thus  be  seen  that  reductions  must  at  all  times  be 
carefully  recorded. 

Stock    Records     Which    Check    Merchandise    and 
Watch  the  Clerk  for  You 

Progressive  retailers,  to  keep  track  of  profits,  not 
only  provide  an  accurate  record  of  cash  received  and 
cash  disbursed,  but  also  a  stockkeeping  system  that  ac- 
counts for  merchandise  on  the  shelf  in  a  manner  to 
check  employes  who  might  sell  goods  worth  one  dollar 
for  fifty  cents. 

"No  merchant  can  hope  to  realize  more  for  his  mer- 
chandise than  he  has  marked  it  when  it  was  placed  in 
stock.  Of  course,  the  reverse  is  to  be  expected,  for  fre- 
quent price  reductions  are  necessary  in  order  to  keep 
odds  and  ends  cleaned  up,  and  it  is  just  as  necessary 
to  keep  an  accurate  record  of  all  selling  price  changes," 
says  one  retailer. 

This  retailer  does  not  find  it  difficult  to  keep  his 
stock  records  straight,  as  he  uses  a  system  that  keeps 
close  tab  on  all  his  activities.  He  also  places  opposite 
each  item  on  an  invoice,  after  it  is  checked  in,  the  selling 
price  of  that  article.  By  extending  these  items,  his  book- 
keeper easily  ascertains  the  exact  amount  of  revenue 
realizable  on  each  bill  of  goods.  The  gross  profit  and 
rate  per  cent  are  then  readily  determined. 

One  invoice,  of  course,  is  not  enough  to  judge  the 
percentage  of  gross  profit,  so  this  merchant  has  a  plan 
that  makes  a  perpetual  record.  Double  columns  are 
provided  for  each  department  and  each  invoice  is  entered 
at  cost  and  at  selling  value.  In  this  way  the  merchant 
is  able  at  all  times  to  determine  the  average  profits  that 
are  made  by  a  department;  if  they  are  not  up  to  the 


40 


EXPENSES  AND  PROFITS 


standard,  he  may  take  steps  to  change  the  condition. 
An  Ohio  hardware  dealer,  in  a  city  of  ten  thousand, 
has  perfected  a  system  of  keeping'  track  of  the  weekly 
department  tnm-ovei*s  of  his  business  and  uses  the 
record  as  a  guide  in  buying,  charging  and  stock-keeping. 
So  simple  is  the  plan  that  it  is  practically  self-operat- 
ing. "While  devised  by  a  hardware  merchant  for  his 
special  purpose,  it  can  with  but  slight  changes  be 
adapted  to  any  store. 

Hoiv  the  Sales  Records  of  a  Retail  St&t-e  Are  Kept 
for  Four  Dollar's  a  Week 

In  putting  the  scheme  into  operation,  a  complete  in- 
ventory and  classification  of  the  stock  according  to  de- 
partments is  made.  Each  class  of  goods  is  defined  by  a 
general  term  such  as  "house  furnishings"  or  "tools," 
and  the  initial  letter  of  the  term  selected  is  used  as  a 
record  mark  in  referring  to  stock. 


Month  Ending 

B 

M 

T 

E 

F 

s 

c 

N 

G 

Total 

yn^..rl.    /f/^. 

3031. 

/srok 

no. 

i-o 

%^1<- 

3ooo 

itUf 

J"br3 

//.39J.r/ 

^ 

L  - 

LJ 



- 

CHART  VII:    Your  cash  sales  may  well  be  carried  every  day  to  the  "Sales  Book  Sum- 
mary" shown  here,  and  the  charged  sales  at  the  end  of  the  week.     You  can  secure  the 
department  figures  by  dissecting  your  sales  slips 

To  make  easy  the  work  of  clerks  in  entering  records, 
the  key-letter  of  each  class  is  written  or  rubber- 
stamped  on  the  shelves  or  on  the  packages  in  which  the 
goods  are  wrapped.    The  classifications  used  by  the  orig- 


RULES  FOR  MARKING  UP 


41 


inator  of  this  scheme  are :  builders '  hardware,  B ; 
house  furnishings,  F ;  miscellaneous,  M ;  stoves,  S ;  Tools, 
T ;  electrical  goods,  E ;  china,  C ;  cutlery  and  giins,  G ; 
bolts,  nails  and  screws,  N.     These  classifications  can  be 


Rough 
Estimated  Cost 


Ca-^X^ 


^ 


J-'i'm    f 


jg  /V/  v-z 


S'iO 


^Ll^aJL 


lUA^2iJJl 


'IM 


m 


/vv^»- 


f/  ro 


&L.a. 


illL 


/UiJiMaLUjJjS. 


x)6.  sy 


/?,f/y 


Ka^.<^ 


^ 


IM. 


'f.n 


l./613}tiH1n  ir 


v-y/-  v/ 


^y,  a 


CHART  VIII:     This  summary  of  purchases,   or  the  "Purchase  Book  Summary,"  re- 
ceives the  net  monthly  purchase  totals  classified  by  departments.     It  regularly  gives 
quarterly  balances,  but  totals  can  easily  be  ascertained  at  any  time 


extended  or  modified  to  suit  the  requirements  of  any- 
particular  store. 

Incoming  invoices  are  checked  by  putting  the  key- 
letter  for  the  class  of  goods  opposite  each  item.  The 
various  amounts  of  goods  purchased  and  stocked  in  each 
department,  with  the  name  of  the  maker,  date  of  ship- 
ment and  the  retailer's  number  of  the  invoice,  are  car- 
ried to  a  "Purchase  Book."  A  summary  of  totals  is 
made  for  each  supplier  and  each  department  in  the 
store,  and  discounts  are  deducted  according  to  depart- 
ments. 

At  the  end  of  the  month,  each  classification  is  totalled, 
credits  received  deducted  and  the  net  total  amount  car- 
ried to  a  "Purchase  Book  Summaiy."  The  total 
amount  of  purchases  made  during  the  month  in  each 
department  can  be  seen  at  a  glance.  A  duplicate  sales 
slip  is  made  out  for  each  sale  with  the  class  initial 
of  goods  sold  entered  on  the  bill  opposite  each  item.    Ad 


42  EXPENSES  AND  PROFITS 

ordinary  sales  book  system  suffices  for  keeping  these 
records. 

At  the  end  of  each  day  the  bookkeeper  totals  the 
amounts  sold  for  cash  in  each  department  by  the  sales 
slips  and  deducts  charged  sales.  The  cash  amounts  are 
carried  to  the  "Sales  Summary  Book."  Charged  sales 
are  entered  in  the  Day  Book  and  dealt  with  weekly. 
Entries  in  the  Purcliase  Book  are  based  on  delivery 
costs.  Prices  in  the  "Sales  Summary  Book"  are  the 
prices  at  which  goods  are  sold. 

The  plan  yields  prompt  returns  by  putting  the  store- 
keeper in  possession  of  full-figure  facts  about  his  busi- 
ness. Relying  upon  annual  or  semi-annual  inventory 
taking  is  a  dangerous  practice,  since  small  daily  losses 
amount  to  a  formidable  sum  when  allowed  to  accumu- 
late for  a  period  of  from  six  to  twelve  months.  Under 
the  annual  inventory  system,  before  the  leaks  are  dis- 
covered, the  business  is  saddled  with  a  deficit  which 
takes  months  to  overcome.  Often  recovery  is  impassible. 
At  an  operation  cost  of  four  dollars  a  week,  this  method 
of  keeping  track  of  sales,  deliveries,  purchases  and  stock 
on  hand  comes  back  to  the  owner  many  times  multiplied 
in  the  shape  of  loss  prevented  and  profits  made  possible 
by  running  the  store  on  a  basis  of  exact  knowledge  in- 
steaxi  of  approximation. 


Net  Profit 


YOUR  only  way  to  get  around  high 
operating  costs  is  to  cut  out  the 
waste  or  to  see  that  the  high  running 
costs  are  covered  by  the  price. 


in  urn 


Part  II 


HOW  TO  HANDLE  YOUR 
TRADE 


The  Store  That  Serves 

"1\/^HEN  your  competitor  across  the  corner 
^  '  ties  up  his  funds  in  mahogany  equip- 
ment, keep  yourself  from  the  opposite  extreme. 
Don't  match  positive  waste  with  negative. 
Cripple  your  store  with  neither  too  much  nor 
too  little.     Keep  your  balance. 

Pay  your  location,  your  building,  your  win- 
dows, your  counters,  your  sales  people,  only 
for  their  effectiveness  in  serving  your  trade. 

Whole  rows  of  thousand  dollar  display  win- 
dows are  blind  to  the  wishes  of  those  who  pass. 

Entire  advertising  campaigns  fail  to  tell  the 
customer  how  he  is  to  be  served  for  his  money. 

Many  a  merchant  hires  an  orchestra  to  at- 
tract loungers,  and  forgets  that  little  silent 
salesman — the  price  tag. 

Store  arrangements  that  devour  your  time 
ride  your  pay  roll.  Mistakes  that  delay  your 
customer  drive  him  across  the  corner. 

The  store  that  succeeds  is  the  store  that 
serves — that  saves  time  and  steps — that  offers 
what  customers  want,  and  makes  it  simple, 
easy,  pleasant,  to  buy  and  get  away. 

0  g 

iirt  -■■■ 


Ill; 


PLANNING  YOUR  STORE  FOR 
MORE  SALES 


Millinery 


''^      I      Boya      I [    Juolors 

Tables     |"|"  Tablea 


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CHART  DC:     This  chart  shows  how  a  retailer  made  a  floor  plan  increase 

his  sales  forty  per  cent.     He  placed  articles  of  everyday  use  in  the  rear 

and  led  his  customers  to  them  through  many  attractive  displays  intended 

to  suggest  additional  purchases 


III: 


III 


CHAPTER  V 

Making  Window  Displays  Draw 
Trade 

WHETHER  you  are  retailing  in  country  or  city, 
the  show  window  is  a  form  of  salesmanship  which 
you  can  keep  within  arm's  reach  of  the  passer-by  every 
hour  of  the  business  day.  Windows  are  exceptionally 
good  types  of  flexible  salesmanship  and  unusually  inex- 
pensive ones. 

It  is  true  that  all  your  competitors  have  this  same 
form  of  salesmanship  in  their  service.  To  overcome  the 
apparent  disadvantage,  you  are  forced  to  use  your  win- 
dows with  individuality.  They  must  be  taken  into  com- 
radeship with  your  salespeople.  They  must  demonstrate 
with  the  pride  of  a  clerk  enthusiastic  for  the  store  that 
back  of  them  stand  the  stock,  the  shop,  the  merchant  out 
of  the  ordinary. 

To  accomplish  this  and  make  your  windows  pull  for 
net  profits  with  their  full  power,  it  is  necessary  to  con- 
sider them  silent  salesmen.  They  are  dumb  salespeople. 
The  windows  must  for  this  reawn  be  made  to  talk  in  the 
manner  of  a  dumb  person — in  motions,  or  demonstra- 
tions, or  signs. 

Place  something  moving  in  the  windows  and  they  are 

4& 


46  HANDLING  THE  TRADE 

no  longer  dumb.  Better  still,  have  thera  demonstrate 
your  goods  in  the  maJving  or  in  some  other  way  connect 
with  your  stock  the  selling  appeal  you  give  them. 

Then  crowds  will  stop,  A  city  music  store  dressed 
a  window  to  represent  a  small,  instrument-cluttered  vio- 
lin shop.  In  it  an  old  violin  maker  puttered  about, 
repairing,  rebuilding  and  varnishing,  exactly  as  if  in 
his  attic  shop  at  home.  Hundreds  of  people  stopped  at 
that  Avindow  every  business  day.  A  member  of  an  or- 
chestra which  plaj^ed  in  the  city  during  a  coast-to-coast 
tour,  inquired  at  his  hotel  where  he  could  get  a  valuable 
violin  repaired.  "Why,"  replied  the  information  clerk, 
"I  passed  a  window  at  the  corner  of  Spring  and  Essex 
Streets  yesterday  with  an  old  fellow  in  it  repairing  vio- 
lins. It  was  certainly  a  dandy  window.  Those  people 
should  be  live  enough  to  help  you  out  right."  The 
musician  found  the  shop  and  received  good  service. 

Concentrate  on  Suggesting  Desires  Your  Stock  Can 
Fill  to  the  Customer's  Satisfaction 

There  is  another  fundamental  rule  to  remember  when 
working  with  your  windows.  The  good  salesman  talks 
one  thing  at  a  time.  A  good  window  will  usually  feature 
but  one  attraction  or  line.  You  may  use  some  secondarj^ 
sign  or  a  moving  object  to  attract  to  the  display,  but 
make  the  display  itself  concentrate  on  one  subject.  Give 
the  customer's  mind  a  single  idea  upon  which  to  center. 

Your  windows  should  stand  on  the  street  and  pleas- 
antly, cheerfully,  reasonably  ask  every  person  who  passes 
to  step  in  at  your  doors.  Think  of  them  in  this  light. 
It  is  then  evident  that  they  should,  above  all,  be  dressed 
with  extreme  care.  They  are  not  doing  you  justice  if 
they  display  a  generous  stock  of  brass  and  nickel  fixtures 
topped  by  bunches  and  heaps  of  stock — that  is,  unless 


WINDOW  DISPLAYS 


47 


you  are  selling  brass  and  nickel  window  fixtures.  Hide 
the  fixtures;  if  that  is  impossible,  use  something  that 
goes  naturally  with  the  stock  displayed.  Hang  the  hat 
on  a  cane  instead  of  a  brass  rack ;  hang  the  summer 
dress  over  a  June-day  parasol,  and  discard  the  nickel 
poles. 


CHART  X:  The  selling  forces  that  attract  customers  from  the  trade  territory  of 
which  your  store  is  the  enter.  Each  medium  reaches  its  small  or  large  circle  of  pros- 
pects; the  salespeople  using  their  persuasion  with  actual  inquirers,  tlic  counter  and  store 
arrangement  urging  store  visitors  to  buy,  the  window  disphiy  drav. 'ng  in  passers-by,  and 
publicity  carrying  the  magnetism  of  values  throughout  your  town  a^d  its  rural  routes 


Trade  springs  largely  from  suggestion,  if  you  stop 
to  analyze  it.  April  suggests  new  suits.  A  remark 
overheard  on  a  busy  street  suggests  that  vou  need  new 
shirts.     Windows  are  suggestion  experts  when  properly 


48  IDVNDLING  THE  TRADE 

equipped.  Let  them  always  suggest  first  of  all,  then 
give  them  stock  to  show  and  prices  to  quote  which  will 
fan  suggestion  into  desire. 

A  reasonably  strong  desire  will  persuade  a  passer  by 
to  come  inside.  This  suggestive  pulling  power  is  shown, 
for  instance,  in  the  simple  display  of  an  Eastern  furni- 
ture store  selling  a  new  make  of  reversible  vacuum 
cleaner.  In  the  center  of  the  window  a  light  red  and 
blue  ball  goes  spinning  about  a  silver  plate.  Around  it 
goes  with  a  steady  ease  which  apparently  accomplishes 
perpetual  motion.  Of  course,  you  quickly  see  the  nozzle 
of  a  reversible  vacuum  cleaner  is  resting  at  just  the 
right  point  on  the  edge  of  the  plate  to  drive  the  ball. 
Back  of  the  nozzle  you  discover  Blake's  vacuum  cleaner 
pumping  air  through  the  nozzle;  and  in  the  center  of 
the  plate,  constantly  circled  by  the  ball,  this  card : 


This   is    the   Way   to   Get   Around 
Dusty  Cleaning 

Not  perpetual  motion — but  a  sure-fire 
way    of    securing    dustless    cleaning 


Come  in  and  let  us  show  you  the  cleaner  pick- 
ing up  little  threads  and  bigger  things 


The  advertising  man  for  this  store  was  following  a 
definite  idea  when  he  ordered  this  display.  He  had 
three  fundamental  purposes  in  mind :  publicity,  co-oper- 
ation wath  clerks,  and  a  tactful  invitation  to  customers 
to  visit  the  store.  Displays  of  a  similar  nature  can  be 
made  adaptable  to  windows  of  any  size. 

You  may  dress  your  windows  with  technical  correct- 
ness, and  offer  in  them  good  stock  at  fair  prices,  but  if 
you  do  not  enliven  them  with  originality,  you  lose  half 


WINDOW  DISPLAYS  49 

their  value.  Either  new  ideas  must  be  featured  or  old 
ones  seen  from  a  new  angle.  Without  some  assistance 
from  outside,  it  is  often  difficult  for  the  retailer  to  find 
original  display  subjects.  Many  manufacturers  offer  a 
display  service  which  is  especially  valuable. 

Write  to  the  manufacturers  of  your  lines  and  find  out 
what  they  can  do  to  help  you.  They  supply  cards, 
models,  samples  and  other  materials.  One  large  New 
York  fur  house  plans  and  writes  entire  advertising  cam- 
paigns for  its  retailers  and  on  request  sends  an  expert 
to  go  over  the  situation  on  the  ground. 

Another  unfailing  source  of  ideas  and  suggestions  is 
open.  This  is  from  current  events  of  local  interest.  A 
confectionery  in  an  Ohio  town,  for  example,  after  sup- 
plying the  pastries  for  an  elaborate  banquet  held  by  a 
local  organization,  made  an  over-supply  as  a  window  dis- 
play, letting  an  attractive!}^  printed  card  tell  the  story: 


THE  PASTRIES  FOR  THE 
BUSINESS  MEN'S  BANQUET 
WERE  SUPPLIED  BY  THIS 
STORE.  STEP  IN  AND 
TASTE  SOME  OF  THEM. 


Incidents  are  happening  at  all  times  which  may  be 
connected  interestingly  with  the  goods  that  retailers 
display  in  their  windows.  By  watching  the  most  clever 
displays  of  various  stores  in  his  town,  a  shoe  store  pro- 
prietor found  he  could  accumulate  many  clever  display 
schemes  which  could  readily  be  changed  slightly  and 
adapted  to  his  own  purposes. 

An  inanimate  object  displayed  in  a  store  window  may 
catch  the  attention  of  the  passer-by.  Put  that  object  in 
motion  and  it  holds  his  interest.    Make  a  man  or  woman 


50  HANDLING  THE  TRADE 

"do  something"  with  that  object  and  the  passer-by  stops 
to  watch  and  then  may  be  drawn  into  the  store. 

Featuring    Goods    by    Showing    What    They    Do 
Usually  Results  in  Increased  Sales 

A  grocery  firm  decided  to  acquaint  the  public  in  a 
town  of  seventy-five  thousand  inhabitants  with  the 
merits  of  a  certain  brand  of  boiled  ham.  Dressing  a 
man  to  represent  a  t^^pical  chef,  he  was  put  in  the  win- 
dow to  cut  slices  of  the  ham  for  feminine  shoppers,  and 
some  two  hundred  women  patrons  daily  had  a  taste  of 
this  meat — a  large  percentage  of  them  deciding  it  was 
"delicious"  and  purchasing.  It  was  the  combination  of 
this  scheme  of  display  with  the  idea  for  touching  the 
woman 's  purse  through  her  palate  that  made  it  an  effect- 
ive "puller." 

A  hardware  dealer  used  this  idea  of  "action  in  the 
display"  to  dispose  of  a  large  stock  of  safety  razors. 

This  dealer  placed  a  card  in  his  window  which  stated 
that  he  would  pay  ten  cents  for  the  privilege  of  shaving 
a  man  in  his  window.  Some  fifty  applicants,  eager  to 
be  shaved,  were  engaged  and  ten  men  were  shaved  dur- 
ing the  hours  of  demonstration. 

This  scheme  proved  a  big  attraction,  and  morning, 
noon  and  evening  the  pavement  was  crowded,  a  good  per- 
centage of  the  lookers  stepping  inside  to  examine  the  big 
variety  of  razors  on  display  at  the  side  of  the  window. 

A  concern  selling  vacuum  cleaners  used  the  same 
method  to  get  customers  in  the  store  and  sell  them.  A 
general  store  disposed  of  a  quantity  of  kitchen  utensils 
by  an  almost  parallel  plan.  There  are  few  lines  of  goods 
where  some  scheme  of  this  kind  cannot  be  applied  as  an 
effective  "silent  salesman." 

There  is  still  another  kind  of  window  display  that 


WINDOW  DISPLAYS  51 

can  be  used  effectively  to  draw  trade.  This  is  to  impress 
the  passing  public  with  the  quality  of  the  goods  through 
a  demonstration  that  shows  how  they  are  made. 

A  shoe  dealer  secured  several  employes  from  a  manu- 
facturer and  enough  machines  for  his  purpose,  and  then 
started  making  shoes  in  his  display  window.  The  busy 
shoe-makers  at  their  work  attracted  a  good  deal  of  at- 
tention— the  scheme  turned  out  to  be  a  big  factor  in  ad- 
vertising his  goods  and  in  pulling  trade  to  the  store. 

Many  a  buyer  does  not  know  he  needs  a  certain  article 
until  its  merits  have  been  forcibly  impressed  upon  him 
through  some  such  show  window  demonstration  as  this. 


SLIOINS  SASHES**-  rixeD-^'* 


CHART  XI:    The  idea  back  of  this  window  lay-out  taites  advantage  of  the  fact  that 
display  is  of  the  greatest  value  when  near  both  the  goods  and  the  customer.    These  dis- 
play windows  are  built  into  the  doorway,  and  enclose  a  path  to  the  counters 

Often  the  mere  pricing  of  all  goods  in  the  window, 
where  these  prices  are  sufficiently  unusual,  serves  as 
one  of  the  most  effective  means  of  drawing  customers 
into  the  store.  It  is  true  that  many  retailers  object  to 
the  use  of  the  price  ticket  on  the  ground  that  it  places 
price  above  quality  and  only  brings  buyers  into  the  store 
to  get  that  one  particular  article. 

This  is  ail  any  kind  of  an  advertisement  docs — it 
depends  upon  the  clerk  or  the  display  within  the  store  to 
multiply  a  customer's  needs  when  once  he  enters. 


52  HANDLING  THE  TRADE 

TVhen  the  story  told  by  the  display  window  strikes 
close  to  a  man's  pocketbook,  it  hits  the  appeal  that  is 
often  most  vital.  There  are  few  lines  of  goods  which 
do  not  demand  that  the  prospective  buyer  look  over  a 
stock  to  some  extent  before  purchasing,  and  an  attract- 
ively displayed  stock  within  the  store  creates  the  desire 
for  other  goods — that  have  not  been  cut  down  for  ad- 
vertising purposes. 

But  all  schemes  for  drawing  trade  through  price- 
marked  goods  on  display  must  include  a  method  of  mark- 
ing the  goods  that  is  neat  and  attractive,  such  as  varied 
colored  cards  that  do  not  detract  from  the  appearance  of 
the  goods,  and  cards  with  catchy  words  of  selling  talk 
in  addition  to  the  price. 

And  whatever  the  scheme  for  making  the  show  win- 
dow do  its  share  of  the  selling  work,  it  can  only  reach 
maximum  effectiveness  when  coupled  up  carefully  with 
the  displays  inside  the  store.  For  it  is  seldom  that  the 
goods  displayed  for  advertising  purposes  are  the  ones 
that  offer  the  big  profits.  Let  the  display  window  draw 
the  buyers — then,  once  in  the  store,  it  is  the  work  of  the 
sales  force  and  the  store  displays  to  create  a  desire  for 
other  and  more  profitable  goods. 


LET  your  customer  know  that  a 
personal  interest  attaches  to  him 
— a  real  personal  interest  that  is  not 
measured  wholly  by  his  orders  and  his 
dollars — and  you  will  win  in  return  that 
close  personal  association  and  active 
support  that  builds  up  business. 

— George  H.  Barbour 


CHAPTER  VI 
Floor  Plans  and  Store  Lay-out 

THE  retailer  daily  faces  two  problems — purchasing 
and  selling.  Successful  purchasing  depends  entirely 
upon  his  knowledge  of  the  market  and  his  ability  to 
forecast  the  immediate  demand.  Successful  selling  de- 
pends almost  entirely  upon  the  attractiveness  of  the 
store,  the  conveniences  it  affords,  effective  advertising, 
intelligent  clerks,  prompt  deliveries,  honest  goods  and 
innumerable  other  factors. 

Under  the  heading  "selling  forces"  may  be  placed  two 
factors — personal  and  impersonal.  The  first  of  these 
two  elements  deals  with  shop  service  fostered  by  the  man- 
ager from  the  highest  paid  clerk  to  the  cash  girl.  The 
impersonal  forces  include  window  decorations,  merchan- 
dise displays,  and  the  convenient  arrangement  of  the 
various  departments. 

"Stock  displays,"  says  a  successful  retailer,  "are  the 
greatest  silent  force  in  modem  merchandising.  They 
are  the  pace  makers  for  the  salesman  and  the  sales- 
Avoman.  Fully  forty  per  cent  of  our  total  sales  may  be 
traced  directly  to  shop  arrangement," 

The  woman  who  visits  the  store  planning  to  purchase  a 
gown  does  not  realize  how  cunningly  the  department  she 

53 


54  HANDLING  THE  TRADE 

must  visit  is  located  so  that  to  reach  the  suit  department 
she  must  pass  both  the  millinery  and  shoe  sections.  After 
purchasing  a  suit,  the  season's  latest  hats  entice  her 
with  their  beautiful  plumes  and  flowers.  All  along  her 
way,  in  fact,  bargains  are  lying  in  wait,  making  it  easier 
to  buy  and  harder  to  leave  the  store  without  making 
more  purchases  than  she  at  first  intended. 

How  a  Customer  Is  Induced  by  the  Arrwngement  of 
Goods  to  Make   Umntended  Purchases 

An  Illinois  merchant  hit  upon  the  plan  of  arranging 
shirts,  ties,  underwear  and  furnishings  near  the  street 
entrance  most  frequented  by  men,  realizing  that  the 
busy  business  man  takes  no  pleasure  in  elbowing  his 
way  through  crowds  of  women.  Accordingly  the  men's 
wear  is  made  most  accessible  and  every  art  of  the  retailer 
is  centered  on  making  the  displays  so  attractive  that  the 
customer  who  hurries  in  for  a  half  dozen  pair  of  socks 
will  end  up  by  buying  a  shirt  and  tie;  so  conveniently 
arranged,  in  fact,  that  they  really  sell  themselves,  the 
clerk  merely  taking  the  order. 

The  merchant  who  appreciates  the  possibilities  of  sell- 
ing goods  the  visitor  has  not  thought  of  buying,  plans 
the  store  in  detail  with  a  system  which  would  amaze  the 
outsider  who  does  not  realize  that  she  cannot  buy  even  a 
spool  of  thread  without  walking  past  counters,  tables 
and  show  cases,  alluringly  filled  with  novelties  and  dress 
accessories  that  catch  the  eye  and  stimulate  the  interest, 
and,  if  possible,  could  be  turned  into  a  purchase.  To 
reach  any  department,  she  must  run  the  gauntlet  of 
alluringly  displayed  necessities. 

'Some  retailers  have  hit  upon  successful  plans  without 
appreciating  just  why  their  arrangements  acted  in  speed- 
ing up  salas,  but  the  observing  merchant  daily  asks  his 


STORE  LAY-OUT  55 

department  heads  "Why"  until  he  has  established  a 
number  of  principles  applicable  to  extending  the  science 
of  the  store. 

The  larger  stores  group  their  merchandise.  One  entire 
floor  may  be  devoted  to  house  furnishings.  When  the 
shopper  is  looking  at  rugs,  it  is  easy  to  interest  her  in 
curtains,  if  they  are  just  across  the  aisle. 

It  is  not  from  chance  that  carpets,  draperies,  furniture 
and  clothing  are  located  on  upper  floors.  Experience 
has  shown  that  customers  go  to  a  store  with  the  fixed 
purpose  of  looking  at  these  articles.  The  first  floor  must 
be  reserved  for  silks,  lingerie,  novelties,  and  small  articles 
of  merchandise  that  the  customer  had  no  thought  of  pur- 
chasing before  sight  of  them  awakened  the  desire  to  buy. 

The  department  manager  of  an  Indiana  furniture 
store,  approached  the  end  of  the  season  with  a  large 
number  of  cedar  chests  on  hand.  They  did  not  sell. 
People  either  overlooked  them  or  the  surroundings  were 
not  right  to  stimulate  buying.  H^  had  them  placed 
three  in  a  row  on  each  side  of  the  main  aisle  leading  to 
the  rug  and  carpet  department  and  just  in  front  of  the 
elevator  entrance.  Across  each  chest  he  threw  a  handsome 
Oriental  rug,  leaving  the  lid  of  the  chest  open.  The 
display  immediately  caught  the  eye  of  the  women-  going 
and  coming  from  the  carpet  department  and  suggested 
the  many  uses  there  are  in  a  home  for  cedar  chests.  The 
entire  lot  was  soon  sold — sales  that  were  induced  by 
proper  arrangement. 

The  question  of  color  effects  is  followed  with  the  skill 
of  an  artist  by  many  efficient  in  the  arrangement  of  goods. 
The  large  stores  aim  to  dress  their  decorations  in  bright 
colors  for  half  tone  light  and  in  subdued  colors  for  broad 
daylight.  On  dark  days  brighter  colors  are  thrown  out 
whenever  possible.    The  question  of  lights  is  no  less  im- 


56  HANDLING  THE  TRADE 

portant  and  department  heads  make  it  their  first  duty  to 
see  that  the  proper  number  of  lights  are  turned  out  and  a 
strong  color  contrast  secured.  The  most  brilliant  lights 
are  provided  for  the  china  and  cut-glass  departments, 
while  the  furniture  rooms  call  for  subdued  lights  that 
emphasize  general  lines  and  effects,  rather  than  details. 

Schemes  That  Add  to  the  Convenience  of  Customers 
Increase  Sales  but  Swell  the  Overhead 

A  degree  of  privacy  must  be  provided  for  in  certain 
departments — for  the  customer  is  often  flattered  by  hav- 
ing goods  brought  out  and  spread  before  her  alone. 
Then,  fitting  rooms  for  trying  on  corsets,  coats  and  other 
apparel  are  provided,  and  a  "costume  room"  is  found  in 
the  larger  city  stores  where  evening  gowns  may  be  seen 
in  artificial  light.  The  little  ones  are  not  overlooked 
either,  for  no  matter  how  great  the  pressure  for  space 
may  be,  the  shop-keeper  finds  a  place  for  an  infants' 
room  where  babies  can  be  cared  for  while  mothers  shop. 
A  play  room  is  fitted  up  with  swings,  sand  piles  and 
amusement  facilities  that  serve  the  purpose  of  entertain- 
ing the  children  and  enlisting  their  services  in  advertis- 
ing the  departments  by  teasing  their  mothers  to  shop 
there  and  coaxing  their  fathers  to  buy  swings  and  de- 
vices they  won't  be  happy  until  they  get. 

Some  departments  are  as  much  fixtures  as  the  store 
itself,  while  others  are  moved  weekly  or  even  daily — a 
veritable  game  that  the  storekeeper  plays  with  his  cus- 
tomers to  lead  them  here  today  and  there  tomorrow,  thus 
familiarizing  them  with  every  nook  and  comer  of  the 
establishment.  If  a  line  of  goods  does  not  sell  in  one 
place,  it  is  moved  along  to  a  more  favorable  location. 

The  "bargain  basement"  is  a  permanent  department 
in  many  stores,  and  even  in  the  smaller  shops  the  most 


STORE  LAY-OUT  57 

effective  arrangement  for  moving  slow,  old  or  sluggish 
stocks  that  need  to  be  disposed  of  quickly,  has  been 
found  in  such  departments.  People  will  go  down-stairs 
to  buy  very  readily  where  they  would  hesitate  to  go  up, 
even  in  stores  with  elevator  service.  This  has  been 
demonstrated  by  retailers  who  have  carefully  studied 
selling.  Women  with,  time  for  bargain  hunting  find 
the  basement  a  field  for  careful  and  economical  buying. 
Where  goods  are  displayed  on  open  counters,  the  buyer 
may  pick  over  and  choose  from  the  stock  in  the  easiest 
possible  manner.  Articles  loosely  placed  over  counters 
add  the  "charm,"  if  such  it  may  be  called,  of  an  abso- 
lutely free  and  unrestricted  choice  of  the  assortment. 

An  Eastern  druggist  hit  upon  a  very  effective  way  to 
get  the  buyer's  eyes  on  goods  that  he  would  not  otherwise 
have  thought  of  buying,  and  the  plan  has  been  copied 
widely.  In  many  drug  stores  that  dispense  soda  water 
and  light  lunches,  tables  for  patrons  are  topped  with  a 
glass  covered  box,  the  glass  forming  the  surface  of  the 
table;  an  excellent  opportunity  for  displays  of  toilet 
articles  and  other  goods  that  will  appeal  to  the  passing 
fancy  is  thus  offered.  Even  though  this  method  of  dis- 
play is  somewhat  restricted  to  certain  businesses,  the 
idea  may  suggest  other  means  for  making  the  buyer  see 
the  goods — and  seeing  them  so  attractively  placed  that 
he  or  she  will  want  to  buy. 

In  a  small  suburban  to\\ai,  the  manager  of  a  general 
store  hit  upon  a  plan  to  cleverly  arrange  his  wares  and 
get  the  most  sales.  Staples  of  the  store's  main  stock — 
groceries — were  all  placed  in  the  rear,  except  fruits  and 
seasonable  goods,  which  were  shown  in  front.  With  the 
groceries  in  the  rear,  one  entering  the  store  would  go 
the  length  of  the  aisle.  Between  the  counters,  tables 
were  used  to  display  mucilage,  stationery,  waste  paper 


58  HANDLING  THE  TRADE 

baskets,  fancy  goods,  cooking  utensils  and  many  things 
that  the  housewife  uses  daily,  but  otlierwise  might  not 
have  thought  of  or  bought.  This  plan  materially  built 
up  sales  outside  the  grocery  department. 

Opening  the  eyes  of  retail  clerks  to  what  the  store  is 
selling — establishing  a  connecting  link  between  window 
displays  and  stock — is  necessary  if  the  full  value  of  the 
window  to  the  merchant  is  to  be  realized. 

Windoiv  Displays  Must  Be  Supported  by  an  Efficient 
Sales  Force  and  Attractive  Store 

It  has  been  said  the  human  eye  is  the  window  of  the 
soul.  In  business  terms  the  window  display  is  the  eye 
of  the  store.  Unless  a  permanent  connection  is  made 
between  the  windows  and  the  location  of  the  stock,  all 
the  effort  and  art  expended  to  secure  attractive  show 
windows  is  wasted.  What  an  efficient  clerk  could  have 
done  may  be  drawn  from  the  example  given  here. 

During  a  recent  "silk  sale"  in  Boston,  a  woman  passed 
a  prominent  department  store  one  morning.  She  had 
not  set  out  to  buy,  but  the  rich  display  brought  her  to 
the  window,  and  her  eye  fastened  upon  a  beautiful  black 
silk  remnant  there  displayed.  Instantly  the  shimmery 
cloth  became  the  focus  of  her  vague  ideas  about  a  gift 
for  her  mother — some  suitable  little  souvenir  to  take 
back  to  the  village  home. 

She  went  to  the  silk  counter  and  described  the  piece 
of  goods.  The  clerk  scratched  his  head  and  at  random 
picked  out  several  patterns  of  the  same  price.  The 
woman  insisted  that  she  had  not  yet  handled  the  same 
patterns  shown  in  the  window.  The  clerk  got  down  an- 
other batch,  with  the  same  result.  His  manner  grew 
less  courteous,  and  he  hinted  that  the  woman  had  passed 
over  what  she  wished  without  recognizing  it.     Twenty 


STORE  LAY-OUT  59 

minutes  were  frittered  away  for  the  shopper,  a  com- 
panion and  the  salesman.  The  counter  was  strewn  with 
silks  to  be  put  away  later. 

The  shopper  kept  both  her  temper  and  her  opinion, 
however.  She  declined  to  take  what  she  did  not  want, 
merely  to  avoid  robbing  the  "window  early  in  the  sale. 
She  invited  the  clerk  to  the  sidewalk  and  made  him  do 
what  a  clerk  rarely  does — look  at  the  window  display  of 
his  own  store,  the  criterion  by  which  customers  judge 
the  goods  he  puts  on  the  counter. 

Moreover,  the  woman  was  right ;  she  had  not  been  per- 
mitted to  handle  that  particular  leader.  She  carried 
away  five  yards  of  it. 

Whole  rows  of  thousand-dollar  display  windows  are 
blind  on  one  side,  and  the  proprietor  doesn't  know  any- 
thing about  the  blemish.  But  here  and  there  clerks  as 
well  as  customers  know  the  displays. 

In  getting  dividends  from  its  show  windows,  a  cloth- 
ing company  in  Chicago  uses  a  method  that  is  round- 
about, but  effective.  During  slack  hours — and  this  usu- 
ally means  the  early  morning  when  the  men's  minds  are 
keen-edged — squads  of  clerks  are  sent  up  to  the  store's 
"school  of  salesmanship."  An  "instructor"  receives 
them  and  gives  each  sciuad  a  straight-from-the-shoulder 
talk  on  selling — on  helping  yourself,  the  customer  and 
your  employer. 

He  teaches  the  salesman  how  to  find  anything  in  the 
store  and  how  to  direct  a  customer  to  any  point ;  how  to 
do  this  courteously,  without  an  air  of  superiority.  And 
incidentally,  how  to  match  a.  window  display  or  climb 
into  the  window  and  get  what  a  customer  wants. 

More  novelty  attaches  to  the  method  followed  by  a 
large  department  store  in  the  same  city.  Blanket  ad- 
vertisements in  the  newspapers  aim  to  feature  something 


60  HANDLING  THE  TRADE 

on  every  floor.  Window  displays  follow  this  publicity 
closely.     And  the  clerks  know  what  is  advertised. 

They  know,  because  the  "blanket"  is  cut  into  sec- 
tions, Avhieh  the  lioor-walkers  on  all  the  ten  floors  spread 
as  news  of  the  day's  features. 

The  matter  does  not  stop  even  there,  however.  Routine 
puts  the  thing  through.  The  advertising  sections  go  to 
an  attendant  who  gives  graphophone  announcements  and 
concerts  in  the  lunch  rooms,  one  day  to  the  men ;  the 
next,  to  the  women.  Two  horns  are  used,  under  the  at- 
tention of  the  operator,  who  is  behind  a  curtain.  And 
between  Sousa  and  Caruso,  let  us  say,  the  clerk  an- 
nounces by  means  of  the  second  horn,  that  to-day,  ladies' 
oxfords,  tennis  rackets  and  novels  are  "featured."  It 
follows  they  are  on  display  in  the  windows,  under  the 
eyes  of  the  passing  thousands,  and  are  being  asked  for 
every  minute. 

This  speech  tells  only  what  the  clerks  addressed  need 
to  know;  and  coming  like  a  song  announcement,  it  "soaks 
in"  and  actually  oils  the  wheels  of  salesmanship. 

Your  selling  force  may  not  number  into  four  or  three 
or  even  two  figures.  Your  annual  bill  for  newspaper  ad- 
vertisements and  window  displays  may  not  span  five 
columns  in  the  ledger.  It  follows  that  lectures  and 
graphophone  schemes  may  be  too  pretentious  for  your 
business. 

Possibly  what  you  will  finally  do  is  to  get  your  clerks 
together  for  a  minute  some  morning  and  say:  "Notice 
that  we're  featuring  the  summer  dress  goods  this  week. 
People  will  be  asking  you  for  those  choice  pink  and 
straw  colors.  Just  stroll  out  when  trade  is  slack,  or  at 
lunch  time,  get  a  breath  of  fresh  air  and — look  them 
over.    Then  come  in  and  locate  them  on  the  shelves." 

But  do  something! 


CHAPTER  VII 
Giving  Customers  Prompt  Service 

ONE  of  the  greatest  problems  in  most  stores,  regard- 
less of  their  size,  is  to  serve  customers  with  a 
maximum  of  speed  during  rush  hours.  The  scant 
analysis  given  to  this  subject  is  apparent  in  many- 
stores,  perhaps  most  conspicuously  in  the  large  stores 
during  busy  seasons  or  in  crowded  periods  of  the  day. 
The  congestion  of  urban  population  is  blamed  for  most 
of  this  trouble,  and  no  doubt  some  of  the  congestion  in 
the  stores  would  be  unavoidable  no  matter  what  the 
methods.     Much  of  it,  however,  could  be  eliminated. 

Under  existing  methods,  it  is  often  impossible  during 
the  rush  periods  to  serve  more  than  sixty  or  seventy 
per  cent  of  the  customers  who  go  to  a  store  prepared  to 
buy  goods.  The  remaining  thirty  or  forty  per  cent,  after 
trying  with  more  or  less  patience  to  spend  their  money 
at  one  counter  or  another,  go  away,  perhaps  to  com- 
plete their  purchases  elsewhere,  or  maybe  not  to  buy  at 
all.  It  follows,  therefore,  that  speeding  up  the  selling 
operations  will  not  only  reduce  the  clerk  hire  and  the 
overhead  ratio,  but  will  add  to  the  volume  of  sales. 

The  manager  in  the  shoe  department  of  a  metropolitan 
store  increased  his  volume  of  sales  about  twenty  per 


62  HANDLING  THE  TRADE 

cent,  because  he  found  a  means  of  gauging  the  waste  mo- 
tion of  clerks  and  eliminating  most  of  it.  He  found  that 
the  advertising  campaign  brought  people  to  the  store  but 
that  the  store  selling  mechanism  could  not  take  care  of 
them.  This  waste  was  due  almost  wholly  to  a  predomi- 
nating fault  of  merchandising:  the  slow  pace  of  cus- 
tomers in  going  through  the  store.  In  the  shoe  depart- 
ment during  special  sales,  one-third  of  the  prospective 
customers  left  without  buying.  A  custom  was  in  vogue 
of  keeping  the  cheaper  grades  of  shoes  upon  counters 
that  immediately  abutted  one  another,  without  adequate 
departments  to  separate  the  sizes  and  styles.  Double 
the  necessary  selling  time  was  lost  by  the  clerks  in  hunt- 
ing for  goods,  and  twice  as  many  clerks  as  were  other- 
wise needed  increased  expenses.  While  measuring  this 
loss  the  following  time-study  was  made : 

Number  of  customers  served  by  one  clerk 5 

Total    time    181  minutes 

Average  time  per  sale 36  minutes 

Total  sales $9.25 

This  record  was  poor,  showing  a  low  average  selling 
price,  while  an  expensive  over-head  continued.  Speed- 
ing up  was  what  the  department  needed,  especially  since 
many  dissatisfied  customers  took  their  cash  away  from 
the  store  because  they  could  not  be  waited  upon  without 
undue  loss  of  time.  A  time-study,  after  improvements 
had  been  made,  .showed  the  following  results: 

Number  of  customers  served  by  one  clerk 11 

Total    time    182  minutes 

Average  time  per  sale    16.5  minutes 

Total  sales    $18.25 

An  increase  of  120  per  cent  in  the  number  of  cus- 
tomers   served,    and    almost    100    per    cent    in    money 


PROMPT  SERVICE  63 

volume  of  sales,  shows  the  increase  in  selling  efficiency. 
The  old  and  new  arrangements  in  this  department 
are  shown  by  charts  (Charts  XII  and  XIII).  Instead 
of  the  long  counters  on  which  collections  of  shoes 
were  dumped,  small  detached  circular  counters 
were  arranged  in  rows  across  the  shoe  section,  each 
bearing  a  single  size.  During  the  rush  of  the  special 
sales,  the  customers  picked  out  the  shoes  they  wished 
to  try  on,  often  without  the  aid  of  the  clerks.  Then, 
stepping  to  the  seats,  they  are  served  in  less  than 
half  the  time  formerly  required.  The  change  necessi- 
tated a  very  small  investment  in  equipment,  although 
the  entire  shoe  section  had  to  be  re-arranged.  Due  to 
the  arrangement  of  equipment,  waste  motion  was  largely 
eliminated,  so  that  the  continual  sorting  of  stock  by  the 
clerks  was  done  away  with.  ]\Iixing  the  sizes  was  prac- 
tically prevented  by  separating  the  circular  counters 
enough  to  enable  the  crowds  to  pass  between  them.  The 
greater  part  of  the  clerks'  selling  time  could  thus  be  de- 
voted to  actual  selling,  and  not  to  sorting  goods  or  hunt- 
ing for  them. 

Customers  Turned  Away  ivithout  Proper  Attention 
Cut  Profits  and  Weaken  the  Store's  Reputation 

When  large  numbers  of  customers  come  to  the  store  to 
buy — in  response  to  advertising  campaigns — and  must 
take  their  money  away  again  because  they  cannot  spend 
it  without  a  prohibitive  waste  of  time  and  energy,  the 
reasons  should  be  ascertained.  The  immediate  loss  of 
trade  resulting  from  such  a  condition  is  not  the  most 
important  factor.  If  the  number  of  persons  leaving  the 
counters  without  being  served  would  forget  the  experi- 
ence, the  loss  would  not  be  great.  But  they  don't.  When 
they  wish  to  buy  goods  in  this  line  again,  they  remember 


64  HANDLING  THE  TRADE 

the  lack  of  attention  and  trade  somcAvliere  else. 

Eighty  per  cent  of  the  shelf  room  in  a  ribbon  depart- 
ment was  found  to  be  wasted,  owing  to  the  scant  facilities 
for  getting  directly  at  the  stock  wanted.  Here  the  waste 
of  time  was  very  heavy,  because  clerks  frequently  had  to 
remove  many  bolts  from  the  shelves  in  order  to  reach 
goods  in  the  rear  of  the  spaces.  To  obviate  this,  it  had 
been  customary  in  some  instances  to  leave  the  rear  por- 
tion of  the  shelves  entirely  empty,  heaping  the  goods  on 
the  counters  instead.  This,  however,  did  not  remedy 
conditions ;  often  it  resulted  in  a  mixture  and  tangle  that 
reduced  efficiency  below  the  former  plane. 

A  study  of  one  clerk  showed  these  results: 

Number  of  customers  served   10 

Total   time    59  minutes 

Number  of  minutes  consumed  in  handling 

stock  foreign  to  the  sale  in  question. .  .32  minutes 

Percentage  of  time  thus  wasted 54% 

Number    of    customers    that    might    have    been 

served  with  proper  equipment 15 

A  plan  was  devised  for  revolving  racks  to  take 
the  place  of  the  wasteful  shelves.  These  racks  were 
supplemented  in  some  cases  by  special  drawer-cabinets. 
The  full  degree  of  perfection  in  equipment  cannot  often 
be  obtained,  although  the  maximum  may  readily  be  ap- 
proached. The  value  of  the  majority  of  such  plans  is 
usually  greatly  lessened  by  the  lack  of  comprehensive 
system  based  on  motion  study. 

In  Manufacturing,  Tools  Are  Carefully  Selected; 
in  Selling,  Scarcely  Considered 

From  the  viewpoint  of  efficiency,  a  great  many  retail 
stores  are  wretchedly  equipped  for  doing  business.  In 
■fee  first  plaoe,  there  is  a  lack  of  specialization  in  fixtures. 


PROMPT  SERVICE  65 

In  other  words,  one  form  of  shelving  and  compartments 
does  duty  for  an  indefinite  variety  of  goods.  In  the 
manufacturing  field,  tools  are  highly  specialized  and  the 
most  skilled  engineering  attention  given  to  them.  In 
the  selling  field,  tools  are  scarcely  considered,  though 
in  reality  they  are  as  important  as  in  manufacturing. 


SEATS 

SEATS 

■'■■ 

m 

wk 

SEATS 

SEATS 

ISi 

. 

SEATS 

SEATS 

.i; 

11^ 

SEATS 

SEATS 

■;-  ■ 

1— 

' 

== 

CHART  XII:    These  fixtures  in  a  retail  shoe  store  are  arranged  the  right  way.    The 

small  circular  counters  (A)  each  display  a  single  size.     Customers  can,  therefore,  make 

their  selections  without  confusion  and  seek  convenient  seats  to  try  on  shoes 

The  selling  tools  are  the  fixtures  and  general  equipment. 
Nine-tenths  of  the  display  possibilities  were  found  to 
be  wasted  in  the  study  of  a  rug  department.  Visitors 
hesitated  to  call  into  service  the  clerk  necessary  to  turn 
back  rug  after  rug  for  inspection.  The  problem  was  not 
so  much  one  of  congestion  as  of  clerk  hire  and  the  prop- 
er display  of  goods.  It  was  seldom  that  the  department 
became  crowded  with  customers;  more  often  it  was 
empty.    Customers  usually  came  for  the  express  purpose 


66  HANDLING  THE  TRADE 

of  buying:,  although  there  was  nothing  to  attract  buyers. 
The  casual  visitor  saw  great  staclvs  of  goods  with  only  a 
rug  exposed  to  view  here  and  there.  Many  customers, 
whose  eyes  might  easily  have  been  caught  by  some  de- 
sirable rug,  took  their  trade  elsewhere. 

A  radical  betterment  has  resulted  from  the  installation 
of  a  hanger  system  which  eliminates  most  of  the  waste 
motion.  Swinging  like  clothes  bars,  these  hangers  sus- 
pend two  iiigs  from  each  arm,  back  to  back.  Con- 
cealed electric  lights  throw  a  strong  radiance  upon  the 
goods. 

The  great  waste  of  selling  motion  that  lay  in  the  old 
method  was  found  by  time-studies.  This  observation 
embraced  the  operations  of  one  clerk  and  his  assistant 
during  the  sale  of  a  9x12  medium  priced  rug  under  the 
old  system  of  piling  the  goods  on  the  floor: 

Number  of  rugs  turned  back  for  inspection  by  the 

customer  52 

Number  of  operations  in  which  the  turning  of  rugs 

was  duplicated  twice   408 

Number  of  operations  in  which  the  turning  of  rugs 

was  duplicated  three  times 106 

Number  of  operations  in  which  the  turning  of  rugs 

was  duplicated  four  times 60 

Average   time   required    to   uncover   rugs 

for  inspection  3  minutes 

Total  time  104  minutes 

By  the  hanger  system,  turning  operations  were  done 
away  with  and  the  services  of  the  assistant  discarded. 
Re-inspections  of  rugs  could  be  made  vnth  a  saving 
of  ninety  per  cent  of  time.  Several  customers 
were  able  to  inspect  rugs  on  a  hanger  at  the  same  time 
and  conduct  their  re-inspection  independently  of  each 
oth«r.    By  this  method  one  salesman,  without  a  helper, 


PROMPT  SERVICE 


67 


could  effect  a  sale  in  fifty  per  cent  of  the  time  formerly 
required  with  a  helper.  The  number  of  persons  visiting 
the  floor  was  also  increased  twelve  per  cent. 

How  a  Congested  Drug  Department  Was  Reorgan- 
ized and  Its  Customer  Capacity  TreMcd 

In  a  drug  department,  the  congestion  was  commonly 
great  in  the  selling  efficiency  of  the  clerks.  A  time- 
study  determined  that  they  were  not  doing  within  sixty 
per  cent  of  capacity  work.  This  was  due  in  a  great  meas- 
ure to  the  time  consumed  in  getting  the  goods  from  the 


Si 

A 

A 

B 

Ml 

Mm 

•;-  -A-  '^ 

SEATS 

, 

V, 

0mmm''''w^ 

SHELVES 


CHART  XIII:     Retail  shoe  store  fixtures  used  the  wrong  way  are  shown  here.     The 

long  tables  (A)  are  covered  with  stock  displayed  regardless  of  size.     Confusion,  delays 

and  lost  sales  result 


shelves.  Owing  to  the  elongated  dimensions,  the  clerks 
frequently  took  forty  or  fifty  steps  in  securing  goods. 
Experiments  indicated  that  this  waste  could  be  cut 
down  at  least  sixty  per  cent  by  re-arranging  the  counters. 


68 


HANDLING  THE  TRADE 


Under  the  new  arrangrement,  a  clerk  could  stand  in  each 
of  the  sections  and  be  within  reach  of  most  of  the  goods 
be  sold.  An  overhead  basket-carrier  system  handled  his 
bundles.     The  width  of  the  aisles  for  customers  was 


AISLC  FOR  CLCnKS 


AISLt  FOR  CUSTOMCRS 


CHART  XIV:     These  counters  are  arranged  to  increase  selling  efficiency  by  placing 

salesmen  always  within  reach  of  the  stock  they  usually  handle.     Portions  of  the  counter 

are  hinged  so  that  clerks  can  get  to  their  posts 

reduced,  but  the  crowds  turned  out  three  times  as  fast. 
Goods  were  better  selected  and  the  use  of  purchasing 
cards — sometimes  called  transfer  blanks  or  travel  slips — 
encouraged  a  customer  wishing  to  make  purchases  in 
two  or  more  of  the  drug  sections.  Wrapping  and  money 
changing  was  speeded  up  to  correspond  with  the  in- 
creased selling  facilities. 

Here  is  one  of  the  time-studies  relieved  of  complex  de- 
tail. The  clerk  selected  for  this  observation  was  con- 
sidered a  good  saleswoman  and  had  been  employed  in 
the  department  for  several  years.  She  was  unaware  of 
the  presence  of  the  observer.  The  time  selected  for  the 
observation  was  a  busy  afternoon  when  the  counter  was 
continually  crowded  with  customers. 

Number  of  customers  served 14 

Total   time   120     minutes 

Average  time  per  customer 8.5  minutes 

Total  sales    ?5.76 

A  most  significant  time-study  investigation  covered 
a  notion  department  where  fortunately  there  was  a  strik- 


PROMPT  SERVICE  69 

ing  opportunity  for  comparing  the  inefficient  methods 
with  relatively  efficient  operations  in  another  store. 

In  a  similarly  busy  period  an  observation  was  made  at 
the  other  store.    The  results  follow : 

Number  of  customers  served 26 

Total  time   120     minutes 

Average  time  per  customer 4.6  minutes 

Total  sales  $8.84 

Thus  in  the  more  efficient  store  the  total  sales  during 
the  two  hours  were  about  fifty-three  per  cent  more  than 
in  the  rival  store,  while  the  number  of  customers  waited 
upon  was  greater  by  more  than  eighty-five  per  cent. 
Working  at  the  same  rate,  these  two  clerks  would  have 
shown  during  a  day  of  nine  hours,  results  as  follows : 

First  Second 

Clerk  Clerk 

Number  of  customers  waited  on 63  117 

Total  of  sales   $25.92  $39.78 

For  this  disparity  in  selling  efficiency,  there  was  a 
clearly  defined  reason.  It  lay,  first,  in  the  equipment, 
and,  secondly,  in  the  instruction.  The  instruction,  how- 
ever, would  have  been  largely  unavailing  without  the 
equipment  as  a  basis.  Yet  it  must  be  remembered  that 
even  in  the  more  efficient  store  no  actual  time-studies 
had  ever  been  made.  The  betterments  had  not  come  from 
analytical  observations  of  motion,  but  from  general  con- 
clusions based  on  more  or  less  accurate  knowledge  of 
motion.  Time-studies  in  the  more  efficient  store  would 
reveal  still  further  opportunities  for  betterment. 

Progressive  Retailers  Will  Take  Advantage  of  These 
Improvementii  Resulting  From  Motion  Studies 

The  stores  of  the  future  will  be  different  from  those 
of  today  in  many  radical  respects.     Some  of  the  im- 


70  HANDLING  THE  TRADE 

provements  which  managers  might  install  in  planning  a 
new  merchandising  building  are  siiraraarized  here: 

(1)  A    closer    relation   between   selling   counters   and 

stock  room.  "Waste  motion  remedied  by  stock 
rooms  on  the  selling  floors  and  extension  of  sell- 
ing space  to  portions  of  the  higher  floors,  thus 
decreasing  waste  of  time  in  replenishing  stock. 

(2)  Mechanical  carriers  between  the  stock  room  and 

store  sections. 

(3)  A  heavy   decrease   in    the  quantity   of   stock   on 

shelves  and  counters  and  an  increase  in  the  quan- 
tity in  the  stock  rooms. 

(4)  Mechanical  carriers  between  the  store  sections  and 

shipping  departments,  eliminating  collecting  and 
trucking  of  merchandise. 

(5)  Re-arrangement    of    departments    and    different 

grouping  of  counters. 

(6)  Adjustable  shelves  and  partitions  so  that  compart- 

ments and  conditions  can  be  changed  at  will. 

(7)  Greater  utilization   of  vertical  store   spaces  with 

upper  deck  platforms  in  some  departments  and 
speeding  up  sales  by  clerk  assistants. 

(8)  The  bridging  of  some  aisles  to  facilitate  the  pass- 

age of  customers  during  congested  periods. 

(9)  The  construction  of  galleries  on  all  selling  floors  to 

increase  the  selling  space. 
The  majority  of  these  improvements  result  from  time 
and  motion  studies.  These  studies  are  just  as  valuable 
in  the  small  shops  as  they  are  in  the  large  department 
stores.  All  sales,  whether  in  village  or  city,  are  made 
along  a  railroad  we  might  call  Sales-Effort.  ■  This  road 
starts  at  Sales-Purpose ;  its  terminus  is  Sales-Completion. 
Time-studies  show  the  quickest  and  the  safest  running 
schedule  between  the  two  points. 


PROMPT  SERVICE  71 

It  is  best  to  make  the  motion  studies  during  special 
sales  or  the  holidays,  when  the  salespeople  are  working 
at  capacity.  This  has  two  advantages.  Fii-st,  faults 
which  hide  themselves  under  daily  routine  become  glar- 
ing when  salespeople  and  equipment  are  pushed  to  the 
greatest  efforts.  Second,  the  results  of  time  studies 
made  of  employes  working  under  pressure  give  maxi- 
mum efficiency  statistics  which  it  would  be  difficult  to 
estimate  from  figures  secured  under  normal  conditions. 
These  maximum  motion  study  figures  must  be  reduced 
by  a  reasonable  allowance  before  they  are  put  into  actual 
use.  Otherwise,  the  salespeople  will  feel  they  are  being 
unduly  pushed. 


Throw  on  the  Light 

KEEP  your  goods  always  before  the 
public.  Get  in  the  glare  of  favor- 
able publicity.  Make  known  the  merits 
of  your  stock. 

Success  comes  by  focusing  the  diver- 
ging rays  of  public  opinion — centering 
the  customer's  choice  on  what  you 
have  to  offer. 

Make  your  ability,  your  commodity, 
your  service  known. 

Every  cent  saved  in  shortened  value, 
is  lost  in  shortened  trade.  To  keep  up 
the  sales — keep  up  the  quality! 

Aim  first  to  sell  satisfaction;  and  the 
goods  that  give  it  will  re-sell  themselves. 


CHAPTER  VIII 
Storekeeping  Short  Cuts 

EVERY  dollar  that  a  company  saves  on  its  cost  of 
maintenance  or  production,  represents  interest  for 
one  year  at  six  per  cent  on  a  capital  of  $16.66.  Figured 
on  this  basis,  it  is  obvious  that  any  economy  that  elimi- 
nates a  needless  expenditure  has  a  direct  and  important 
bearing  upon  the  value  of  a  business.  A  saving  of  even 
a  dollar  a  day  upon  some  apparently  trifling  detail  may 
effect  the  theoretical  value  of  the  stock  of  a  corporation 
over  $6,000 — b,  sum  that  is  not  to  be  lightly  regarded  by 
even  a  large  concern.  And  the  saving  of  a  dollar  a  day 
is  possible  in  offices,  stores  and  factories  of  very  moderate 
proportions  indeed. 

The  methods  by  which  these  elusive  "unnecessary"  ex- 
penses may  be  located  and  stopped  must,  as  a  rule,  be 
devised  by  those  who  are  intimately  familiar  with  the 
detail  work  where  the  economies  are  to  be  effected,  and 
who  are  in  a  position  to  suggest  ways  for  accomplishing 
the  necessary  work  by  shorter  or  more  effective  routes. 


Re-arrangement  of  lighting  and  counter  space  are  short 
cuts  which  saved  one  suburban  retailer  over  six  hundred 
dollars  in  eleven  months. 


72 


SHORT  CUTS  FOR  THE  RETAILER    73 

It  is  seldom  possible  for  an  executive  head  to  point  out 
the  specific  methods  by  which  these  detailed  expenses 
may  be  reduced  unless  he  is  thoroughly  versed  in  the 
routine  of  the  department,  however  competent  he  may 
be  to  analyze  the  work  of  the  department  as  a  whole  and 
establisli  a  standard  of  expense  with  which  it  must 
operate. 

A  grocer  in  upper  "Wisconsin  employs  two  clerks,  and 
when  business  is  unusually  brisk  he  turns  in  and  helps 
with  the  selling  end  himself.  Several  months  ago,  he 
awoke  to  the  fact  that  one  of  the  clerks  was  selling  a 
great  deal  more  merchandise  than  the  other,  and  more 
than  he  himself.  At  first  he  had  no  accurate  records  for 
comparison  and  only  sensed  that  there  was  a  difference 
in  the  way  that  Jim  handled  customers. 

"The  difference  was  especially  noticeable,"  he  said, 
** whenever  there  was  a  rush  at  the  counters.  I  couldn't 
see  that  Jim  was  any  quicker  on  his  feet  or  any  more 
deft  at  tying  up  parcels  than  Rob  or  I,  but  the  impres- 
sion grew  on  me  every  day  that  he  really  did  wait  on 
almost  twice  as  many  people  as  either  of  us.  He  seemed 
to  have  a  peculiar  knack  of  being  able  to  sell  the  goods 
without  wasting  time  in  putting  up  a  sales  argument. 

"I  didn't  allow  any  false  sense  of  humility  to  keep 
me  from  investigating  further.  If  my  first  sensing  of 
the  situation  was  correct,  and  Jim  was  actually  selling 
more  goods  than  we  were,  I  wanted  to  know  it  and  to 
find  out  why  he  was  able  to  accomplish  it. 

* '  I  had  never  kept  tab  on  individual  sales  prior  to  this. 
My  only  record  of  the  daily  sales  of  the  store  was  a 

Figure  what  'percentage  each  clerk's  salary  is  to  his  sales — 
wasted  time  cost  one  retailer  five  thousand  dollars  before  he 
discovered  his  loss. 


74  HANDLING  THE  TRADE 

total  record.  I  had  no  way  of  finding  out  which  clerk 
had  sold  the  most  goods  or  how  much  any  one  of  us  had 
sold.  I  decided  to  get  this  information  at  once  to  see  if 
it  would  back  up  my  opinion  formed  from  observation. 

"So  I  required  each  one  of  the  boys  to  file  his  dupli- 
cates separately  and  record  the  total  each  day,  and  I 
did  the  same  witli  mine.  I  kept  this  up  for  a  month  in 
order  to  get  a  fair  average  record  and  found  that,  true 
to  my  hunch,  Jim  was  selling  more  goods  than  Rob  and 
I  put  together.  Of  course  I  didn't  pretend  to  help  in 
the  selling  except  on  rush  days,  but  even  at  this  Jim 
had  Rob  bested  by  over  fifty  per  cent. 

"So  I  went  to  Jim.  I  didn't  tell  him  that  his  sales 
were  so  far  in  the  lead,  but  merely  said  that  I  found 
that  he  seemed  to  be  able  to  take  care  of  customers  very 
rapidly  and  told  him  that  I  would  be  glad  to  know  just 
how  he  did  it.  I  evidently  struck  upon  his  pet  subject, 
for  he  was  all  loaded  for  me  and  was  able  to  tell  me 
plainly  and  explicitly  the  secret    of  his  quick  sales. ' ' 

* '  When  I  put  the  question  to  him,  he  smiled  and  said : 
*  You  fellows  do  all  your  s'elling  alone.  I  use  an  assistant. 
You  have  to  take  the  time  to  convince  a  customer  of  the 
merits  of  the  brand  you  sell  her.  Mine  are  already  con- 
vinced. I  make  use  of  national  advertising ;  you  do  not. 
That  is  all  there  is  to  it.  I  push  goods  that  are  already 
favorably  known  to  the  consumer  and  he  takes  'em  with- 
out argument  or  loss  of  time.  Consequently  my  cus- 
tomer is  served  and  satisfied  and  out  of  the  store,  and  I 
am  busy  with  another  one,  before  you  have  got  your 
prospect  convinced  that  your  brand  is  just  as  good. ' 

Regular  customers  are  worth  from  $15  to  $60  each  a  year 
to  you — find  out  if  any  are  being  driven  away  from  your 
store  by  failure  as  to  stock  or  service 


SHORT  CUTS  FOR  THE  RETAILER    75 

"I  tried  out  the  clerk's  idea  and  found  that  he  was 
right.  I  had  some  articles  in  stock  that  I  made  a  little 
more  money  on  than  on  the  advertised  brands,  and  so  I 
had  always  tried  to  push  them  with  the  trade,  as  I  be- 
lieved they  were  just  as  good  values  for  the  money.  But 
now  I  saw  where  I  had  made  a  serious  mistake.  To  make 
an  extra  cent  or  two  on  a  package  I  had  actually  been 
obliged  to  content  myself  with  making  fifty  per  cent 
less  sales.  I  don't  stock  anything  but  well  advertised 
brands  any  more,  because  it  took  me  so  much  longer  to 
make  a  sale  when  I  had  to  convince  customers  (some- 
times against  their  will)  of  the  merits  of  the  goods. 
Every  can,  package  and  bottle  on  my  shelves  bears  a 
trade-mark  now  and  none  of  us  waste  any  more  time 
doing  a  work  that  the  national  advertiser  is  willing  to 
do  for  us." 

Almost  always  there  is  a  way  to  cut  expense  along 
some  line  that  has  escaped  attention.  For  example,  a 
furniture  factory  near  the  Ohio  River  had  lost  $8,000  to 
$14,000  a  year  for  seven  years.  The  owners,  believing 
that  loss  lay  partly  in  power,  installed  new  boilers  and 
then  better  machinery.  Wages  were  cut  and  every  outgo 
trimmed.    Still  the  factory  ran  behind. 

In  despair,  the  owners  hired  a  successful  manager  at 
$10,000  a  year,  on  condition  that  he  make  the  plant  pay. 
After  a  month  spent  in  analyzing  the  situation,  he  con- 
cluded that  the  big  expense  lay  in  labor,  much  of  which 
went  to  waste.  Many  piece-workers  had  been  earning 
only  .$1.2.5  a  day,  or  less.  The  new  manager  fixed  the 
reasonable  minimum  at  $2.50.     He  did  this  to  increase 


Don't  let  gross  sales  enter  into  your  stock-turn  figures — sim- 
ply divide  your  -purchases  at  cost  for  the  period  by  the  average 
stock  on  hand  during  the  period  at  cost. 


76  HANDLING  THE  TRADE 

the  efficiency  of  labor  at  least  100  per  cent  in  order  to 
establish  an  equilibrium  between  machine  capacity  and 
overhead  expense  on  one  side,  and  labor  on  the  other. 
To  accomplish  this  he  established  a  bonus  system,  and  dis' 
charged  all  workers  who  did  not  prove  capable  of  re- 
sponding to  the  increased  demands.  More  than  one- 
half  of  the  workers  were  too  old  or  too  antagonistic,  and 
new  blood  had  to  be  instilled.  For  a  time  there  was 
bitterness  in  the  town  toward  the  new  manager.  But 
there  was  no  alternative  except  to  close  down  the  plant 
and  throw  all  the  employes  out  of  work,  and  the  men 
held  their  peace. 

Anotlier  waste  that  he  corrected  was  traced  to  incom- 
petent cutting,  which  caused  a  heavy  loss  in  raw  ma- 
terial. Added  to  this,  and  closely  allied  to  the  labor 
loss,  was  a  big  waste  stock  of  goods  spoiled  in  machining. 
A  whole  building  was  found  to  be  filled  with  this  ac- 
cumulated stock.  Most  of  it  was  charged  off  and  used 
for  fuel. 

In  the  paint  shop,  the  manager  discovered  by  tests  that 
some  of  the  men  dripped  a  quart  of  varnish  a  day 
apiece.  No  comparative  records  had  been  kept  to  reveal 
this  loss. 

Failure  to  utilize  waste  material  by  turning  it  into 
by-products  also  made  a  considerable  item.  The  second 
year  after  the  change  in  managers,  the  plant  earned 
$14,000  net;  the  fifth  year  showed  a  profit  of  $75,000. 

Minimum  results  from  labor  is  the  tragedy  that  occurs 
in  too  many  businesses.  This  sort  of  loss  is  the  most  in- 
sidious, for  it  does  not  show  on  the  records  unless  a 

Remember  your  expenses  and  net  profits  come  out  of  your 
selling  price  and  not  out  of  the  cost  price.  The  selling  price 
is  100%;  cost  equals  100%  less  your  mark-up. 


SHORT  CUTS  FOR  THE  RETAILER    77 

special  gauge  is  devised.  The  futility  of  attempting  to 
reduce  expenses  without  a  standardized  table  of  costs, 
based  on  actual  observations  and  tests,  is  illustrated  by 
a  retail  mercantile  house  that  had  spasms  of  economy, 
but  had  never  determined  the  proper  percentage  expense 
should  bear  to  sales  in  each  department.  Thus  one  class 
of  expense  would  be  double  what  it  should  have  been, 
while  another  was  cut  below  normal,  to  the  point  of 
seriously  affecting  the  efficiency  of  the  entire  house. 

Department  Costs  are  Necessary  to  Locate  Wastes 
and  Properly  Place  Responsibility 

For  instance,  the  same  cut,  ten  per  cent,  was  made  in 
the  sales  department  and  in  the  stable.  No  comparative 
record  was  available  to  show  what  the  bam  expense  ought 
to  be,  per  horse,  per  wagon  or  per  pound-mile  of  cart- 
age. There  was  no  way  to  check  up  on  teamsters  who 
spent  hours  in  the  saloon,  or  on  the  bam  boss  who  ob- 
liged his  friend,  the  cab-driver,  with  a  hundred  pounds 
of  free  oats. 

Tlie  foreman  of  the  packing-room  had  already  insti- 
tuted many  economies,  such  as  the  use  of  paper  cartons 
instead  of  boxes,  and  an  original  checking  system,  where- 
by one  checker  did  the  work  formerly  done  by  two.  But 
his  department  was  ordered  to  cut  off  a  greater  percent- 
age than  the  shipping  department,  where  a  re-arrange- 
ment and  different  routing  would  have  saved  much  ex- 
pense had  the  head  possessed  the  necessary  initiative. 

The  sales  department  got  the  brunt  of  the  cut,  al- 
though the  traveling  men  had  been  kept  down  to  reason- 

Walch  Jor  ovenreighls  and  ovcrmeasures — a  quarter  ounce  over- 
weight cuts  profits  many  dollars  a  year.  Within  a  year,  over- 
weights in  lard  cost  a  retailer  seventy  dollars. 


s 


78  HANDLING  THE  TRADE 

able  figures.  The  buyers  were  not  molested,  though  they 
ran  up  extraordinary  expense  accounts,  especially  those 
who  went  abroad.  There  was  no  established  percentage 
of  buying  expense.  A  certain  department  was  showing 
good  profits,  so  it  was  assumed  by  the  head  office  that 
its  high  expense  was  all  right.  Another  department, 
showing  a  small  profit,  was  assessed  twenty  per  cent.  It 
was  afterward  shown  that  the  ratio  of  the  latter  was  al- 
ready far  too  low,  while  that  of  the  former  was  excessive, 
notwitlistanding  the  profits. 

This  business  had  been  established  many  years,  and 
might  easily  have  determined  the  legitimate  ratios  of 
costs  of  the  various  departments,  so  that  no  department 
need  be  punished  for  the  faults  of  another.  It  is  obvi- 
ously difficult,  if  not  impossible,  to  limit  the  expenses  of 
a  department  \vithout  a  knowledge  of  its  legitimate  ex- 
penses. 

Checking  Wasted  Minutes  among  Salespeople  Often 
Adds  Dollars  to  Your  Pro-jits 

One  of  the  big  items  of  expense,  commonly  unrecog- 
nized, is  waste  time.  By  changing  the  location  of  a 
stairway,  a  wholesale  house  saved  four  hours  of  sales- 
men's time  a  day,  which  in  a  decade  would  equal  the 
time  of  one  man  for  five  years.  But  since  the  men  in 
this  establishment  did  not  work  by  the  hour,  this  esti- 
mate is  approximate.  The  actual  saving  might  have 
been  much  more.  In  the  rush  seasons,  even  the  saving  of 
a  few  minutes  on  each  customer  is  important. 

The  re-routing  of  delivery  wagons  saved  one  house 

Duplicate  sales  slips  enable  you  to  push  the  stock  which 
moves  and  check  bad  buying — the  cause  of  poor  stock- 
^    turns  and  dwindling  net  profits. 


SHORT    CUTS  FOR  THE   RETADLiER        79 

the  expense  of  a  wagon.  The  manager  of  a  retail  store 
placed  a  curtained  mirror  where  it  was  most  accessible 
to  his  women  clerks,  saving  customers  annoying  waits 
while  the  girls  arranged  their  hair.  A  candy  manufac- 
turer took  advantage  of  the  market  and  bought  one  hun- 
dred barrels  of  sugar  for  cash,  but  stipulated  that  de- 
liveries be  made  in  ten-barrel  lots  to  save  re-handling. 
All  of  these  were  little  cuts  in  expenses.  A  hundred  such 
items  loom  big  in  the  aggregate. 

A  grocer,  aroused  by  new  competition  next  door,  re- 
arranged his  stock  so  that  goods  called  for  most  often 
might  be  most  accessible.  Formerly  he  had  kept  his 
canned  goods  on  inconvenient  shelves,  requiring  the  fre- 
quent use  of  a  stepladder.  Now  he  put  a  supply  of  this 
stock  sufficient  to  meet  rush  requirements  on  display 
tables;  during  slack  hours  his  clerks  replenished  the 
tables.  This  plan,  followed  wherever  possible,  often  saved 
several  minutes  on  a  customer,  and  prevented  him  from 
walking  out  and  buying  at  the  next  store.  In  a  busy 
establishment,  the  quick  dispatch  of  customers  means 
money. 

A  big  lumber  concern  found  that  it  had  been  losing 
t'lonsanda  of  dollars  a  year  through  waste  of  odds  and 
ends.  "When  an  order  for  special  sizes  of  lumber  was 
filled,  the  sawed  off  ends  were  discarded  and  either 
burned  or  carted  away  by  the  employes.  The  superin- 
tendent discovered  this  waste  and  directed  that  all  the 
odds  and  ends  were  to  be  stored  away  in  special  compart- 
ments with  the  sizes  marked  on  them.  "Within  a  few 
months  a  big  assortment  of  short  sizes,  some  running  as 


Take  maximum  dixoants  on  your  bills;  two  per  cent  on 
a  weekly  stock-turn  is  one  hwndred  and  jour  -per  cent  a 
year  from  discounts  alone. 


80  HANDLING  THE  TRADE 

low  tos  two  feet  in  length,  Avcre  held  in  stock.  It  was  a. 
surprise  to  the  superintendent  himself  to  find  how  many, 
small  ordera  could  be  filled  from  these  short  pieces. 

A  large  toy  novelty  house  estimated  that  its  losses 
through  breakage  amounted  to  two  thousand  dollars  a 
year.  Some  years  this  was  increased  half  again  or  even 
doubled.  The  manager  determined  to  make  a  systematic 
hunt  for  the  cause.  A  good  many  of  the  articles  were 
crushed  in  impacking  and  displaying,  and  others  were 
broken  by  the  customers  who  handled  them.  An  investi- 
gation showed  that  employes  were  deliberately  careless 
in  many  instances,  and  some  were  suspected  of  breaking 
toys  purposely.  A  new  rule  was  adopted.  Every  packer 
who  broke  a  toy  or  article  had  to  make  a  record  of  it  in 
a  book,  and  a  small  bonus  was  offered  each  month  for 
the  one  who  did  not  have  his  name  entered  in  the  book. 
Broken  toys  were  no  longer  given  to  the  employes,  but 
were  sent  away  to  a  charitable  society  that  could  make 
use  of  them.  An  invariable  rule  was  made  that  no  cus- 
tomer be  allowed  to  handle  the  mechanical  toys,  and 
only  clerks  were  permitted  to  make  demonstrations. 
Within  a  year  the  loss  through  broken  articles  was  re- 
duced one-third. 

The  waste  of  facilities  for  poor  displays,  dingy 
stores,  insufficient  light  and  heat,  icy  sidewalks,  dis- 
loyalty of  overworked  and  underpaid  clerks,  is  all  nega- 
tive expense,  but  just  as  positive  in  results  as  if  so  much 
money  had  been  throAvn  away.  Some  merchants  cut  out 
practically  all  other  avoidable  expense  and  leave  this, 
looming  by  itself. 


go  Ml 

9  ; 


Part  III 


REPLACING  GUESSWORK 
WITH  FACTS 


Darrell  Maxims 

ASK  YOURSELF  "WTHY"  upon  every  de- 
tail in  your  storekeeping — every  detail  of  your 
stock. 

SAVING  MOTIONS  and  minutes  will  en- 
able you  to  handle  a  trebled  business  in  your 
original  store  space. 

BUY  WHAT  your  customers  would  buy 
for  themselves  if  they  knew  the  wholesale 
market. 

BEING  CIVIL  to  the  jobbers'  salesmen 
enables  you  to  stock  at  average  prices. 

WHEN  EMPLOYES  can't  see  the  reason 
for  a  new  move,  you  must  show  them.  Unless 
they  believe  in  their  proposition,  they  cannot 
sell  it. 

KEEP  RECORDS  to  show  you  what  goods 
are  wearing  out  their  welcome  on  your  shelves. 

YOU  CAN  make  your  monthly  inventory 
serve  two  important  uses;  from  it  you  can 
figure  actual  profits;  from  it  you  can  deter- 
mine what  stock  is  moving  and  what  merely 
tying  up  capital. 

CHART  YOUR  SALES  total  for  each  de- 
partment and  you  get  a  vivid  picture  of  how 
seasonable  demands  affect  sales. 

^ q 


Ill: 


:iii 


HOW  TO  MAKE  CURVES  CHECK 
A  SALES  SLUMP 


Sales  by  Months 
Jan.     Feb.  -  Mar.     Apr.    May     June    ,JuIy    AugT    Sept.    Ocu   Nov.    Dec. 


CHART  XV:     These  graphs  showed  Darrell,  a  New  England  grocer,  that 

he  must  expect  sales  slumps  in  the  summer  and  make  special  efforts  to 

attract  trade.     The   small   vertical  squares  represent  the  sales  in  dollars 

and  ten  of  the  small  horizontal  squares  one  month 


■ui: 


:iiv 


CHAPTER  IX 

What  a  Branch  Store  Taught 
a  Grocer 


I  HAVE  been  two  kinds  of  store- 
keeper. For  eleven  years  I  was  a 
guesser.  My  buying  was  by  guess.  My 
selling  methods  were  guesses.  I  guessed  at 
my  cost  of  doing  business — guessed  at 
what  my  prices  should  be — guessed 
at  my  profits — and  guessed  where  the 
money  I  should  have  made  had  gone. 
About  each  of  these  things,  I  knew  al- 
most as  much,  I  believe,  as  the  average 
grocer  of  my  class.  But  my  information 
was  neither  exact  nor  specific — the  only 
kind  of  knowledge  on  which  a  sound 
business  can  be  built. 

Then  I  woke  up.  I  began  to  ask  my- 
self why  my  store  was  standing  still  and 
what  I  needed  to  change  in  order  to 
produce  results.  I  adopted  a  "why"  at- 
titude towards  every  detail  of  my  store- 
keeping  and  every  article  in  my  stock. 
I  had  read  a  lot  about  "modem  meth- 


Darrell,  a  retail 
grocer  in  New 
England,  here 
tells  how  he 
increased  his 
annual  sales 
from  $37,000  to 
$  1 27,000  and 
cut  his  average 
mark-up  from 
about  thirty- 
live  to  twenty- 
Hve  per  cent, 
with  nearly  a 
doubled  net 
profit. 


He  went  over 
every  detail  of 
his  store  and 
analyzed  it 
carefully. 


83 


M 


FACTS— NOT  GUESS  WORK 


He  had  blun- 
dered along  for 
eleven  years  be- 
fore it  broke 
upon  him  that 
if  he  knew  ac- 
curately zi'hat 
was  going  on  in 
his  own  store, 
he  could  smile 
at  the  "cash 
market"  on  the 
next  corner. 


He  said  to 
himself,  "This 
stock  system  is 
not  right  merely 
because  I  use 
it;  this  pur- 
chase method  is 
not  good  be- 
cause I  do  it; 
■  this  equipment 
is  not  the  best 
because  I  own 
it." 


ods"  in  retailing,  but  had  failed  to  ap- 
ply this  reading  to  my  business.  Until, 
in  the  smoking  compartment  of  a  train, 
I  talked  for  an  hour  with  the  buyer- 
manager  of  a  western  department  store 
about  merchandising. 

From  him  I  got  five  ideas:  first,  to 
>  "t  rid  of  traditions  and  personal  likings 
or  prejudices  in  making  decisions  or 
purchases;  second,  to  buy  nothing  you 
can't  sell  at  a  profit,  either  in  money  or 
advertising,  and  to  judge  every  article 
bought  from  the  customer's  viewpoint  of 
values ;  third,  to  turn  your  stock  as  often 
as  possible ;  fourth,  to  give  full  and  exact 
measure  but  no  more  at  each  sale ;  fifth, 
to  know  your  costs  and  what  makes 
them,  and  to  cut  them  to  the  lowest  point 
without  sacrificing  quality  and  service. 
He  did  not  state  these  principles  for- 
mally ;  I  am  only  telling  what  I  got  out 
of  his  talk,  then  and  later. 

Coming  back  to  my  store,  I  tried  to 
apply  these  ideas.  My  first  effort  was 
to  size  things  up  as  would  an  outsider 
with  a  fresh  point  of  view.  I  began  with 
my  customers.  The  store  served  an  ex- 
clusive neighborhood — one  of  Boston's 
better  suburbs.  My  people  were  intelli- 
gent and  discriminating.  They  wanted 
the  best  meats  and  groceries  in  the 
market.     They  also  wanted  prices. 

To  offer  them  so-called  bargains 
would  be  to  oft'end  them ;  they  demanded 


A  BRANCH  STORE   EXPERIMENT 


85 


values,  and  the  increasing  cost  of  living 
had  made  them  more  critical  than  ever 
before.  Many  of  them  were  buying 
staples,  package  goods,  and  other  branded 
specialties  at  the  city  department  stores 
and  were  giving  me  only  the  tag  ends  of 
their  orders.  To  recover  this  part  of  my 
trade,  it  was  plain  that  I  would  have  to 
meet  the  department  store  inducements, 
and  besides  better  serious  local  com- 
petition. 

How  to  do  this  was  the  problem.  Like 
the  residents  of  most  high  class  subur- 
ban towns,  my  customers  and  prospec- 
tives  were  receiving  everything  in  the 
way  of  service  and  accommodation  which 
they  chose  to  ask.  On  request,  a  clerk 
called  each  morning  to  take  their  orders. 
Special  deliveries  of  trifling  purchases 
were  common.  Charge  accounts  were 
the  rule — with  payments  at  the  conveni- 
ence of  the  customer  and  an  occasional 
loss  as  the  result  of  this  loose  credit  and 
collection  system.  To  please  their 
"regulars",  salesmen  frequently  erred 
on  the  side  of  generosity  in  weighing  or 
measuring  goods.  Baskets,  boxes  and 
containers  of  all  kinds  were  given  away. 
And  so  on. 

My  store  was  no  worse  in  these  re- 
spects than  the  average  grocery  in  a 
keenly  competitive  neighborhood.  But 
all  this  service  ran  costs  up  to  a  level 
which  made  consumers  restive  and  en- 


Hoiv  he  began 
to  test,  to  find 
and  correct  his 
store  faults 
■without  waiting 
for  his  custom- 
ers to  do  it  for 
him  at  the  ex- 
p  en  s  e  of  his 
profits,  is  a  day- 
by-day  key  to 
the  problems  of 
the  retail  mer- 
chant. 


Climb  out  of 
the  rut.  Get 
new  ideas. 
Don't  be  preju- 
dic  e  d.  In  an 
hour  this  gro- 
c  e  r  got  new 
ideas  wh ic  h 
brought  him 
success  after 
failure. 


86 


FACTS— NOT  GUESS  WORK 


Study  your  cus- 
tomers. See  if 
they  can  get 
what  they  n'ant 
at  your  store, 
both  in  prices 
and  goods. 


Enterprise 
will  often  re- 
gain trade 
which  big  de- 
partment stores 
take  away  from 
the  smaller  re- 
tailer. 


Give  a  customer 
all  possible  ser- 
vice, but  not  at 
the  cost  of 
right  selling 
prices. 


couragcd  department  store  buying.  At 
the  same  time,  it  was  a  question  whether 
any  reduction  of  service  could  be  effected 
without  an  immediate  loss  of  trade.  I 
determined  to  find  out.  Expenses  had 
been  pared  to  the  point  where  further 
savings  looked  impossible  in  any  other 
direction. 

Price,  service  and  volume  of  sales, 
then,  were  the  factors  in  my  problem 
and  I  began  to  study  their  effect  on  one 
another. 

In  the  first  place,  what  service  was 
absolutely  necessajy  to  hold  my  cus- 
tomers, and  what  features  would  they 
dispense  with  in  exchange  for  lower 
prices?  Could  I  eliminate  these  "ex- 
tras" and  stimulate  buying  by  paying 
consumers  to  get  along  without  them  or 
perform  them  for  themselves?  In  buy- 
ing from  city  stores,  cash  markets  and 
peddlers,  they  showed  such  a  tendency. 
Could  this  tendency  be  developed, 
through  education  and  cash  savings,  into 
a  fixed  habit? 

The  margin  between  profit  and  loss  in 
my  main  store  was  too  narrow  to  risk 
disturbing  conditions  through  radical 
experiments.  I  decided,  therefore,  to 
open  up  a  small  store  in  a  neighboring 
locality  and  try  out  a  number  of  new 
ideas. 

This  new  store  was  started  on  the  basis 
of  offering  the  highest  class  of  goods  at 


A  BRANCH  STORE   EXPERIMENT 


87 


the  lowest  possible  margin  of  profit. 
There  was  to  be  no  delivery  and  all  sales 
were  to  be  for  cash  only.  This  branch 
was  stocked  from  the  main  store  and 
stock  was  checked  in  detail  every  week. 
Expenses  were  small  and  easily  ascer- 
tained, while  the  outlay  for  fixtures  and 
equipment  was  kept  as  low  as  possible. 
The  features  of  cash  sales  and  no  de- 
liveries were  advertised  as  giving  a  great 
leverage  in  reducing  the  prevailing  high 
prices.  I  made  the  most  of  the  un- 
doubted advantages  to  the  customer  in- 
herent to  cash  buying  and  backed  my 
arguments  with  concrete  bargains.  From 
the  first,  the  branch  store  was  a  success. 
Certain  other  economies  which  I  had 
in  mind  for  the  big  store  were  tried  out 
during  this  same  period.  One  was  a 
careful  check  on  stock.  I  explained  to 
my  clerk  how  ''good  measure"  wiped 
out  honest  profits.  Then  I  started  a  sys- 
tem of  charging  every  item  received  and 
made  weekly  inventories  to  check  the 
stock  on  hand  against  stock  received  and 
sold.  This  process  gave  no  infallible 
check,  of  course — more  dependable  meth- 
ods were  to  be  worked  out  later — but  it 
helped  to  bring  home  to  my  two  sales- 
men their  responsibility  in  weighing  and 
mea.suring.  A  monthly  discrepancy  was 
bound  to  occur,  but  the  los.ses  were  kept 
down  and  the  efficiency  of  the  clerks  in- 
creased because  of  their  watchfulness. 


Loss  of  trade 
usually  follows 
service  reduc- 
tion. Study  your 
trade  carefully 
before  making 
changes  which 
will  affect  serv- 
ice. Learn  how 
much  your  pa- 
trons unll  do 
for  lower 
prices. 


Learn  your  cus- 
tomers' reasons 
for  going  to  a 
c  am  p  e  t  iter's 
store.  See  if 
they  can  be  ad- 
V an  t a geously 
turned  to  win 
trade  with  you. 
Find  the  weak 
points  in  your 
"policy."  Elimi- 
nating excess 
service  will  en- 
able you  to  re- 
duce selling 
costs. 


88 


FACTS— NOT  GUESS  WORK 


Ovcriveights 
sap  profits  as 
jtirely  as  uudcr- 
weights  do 
trade.  Train 
your  clerks  in 
their  respon- 
sibili  t  y  for 
weights  and 
measures. 


To  fix  prices 
judiciously  you 
must  know  the 
cost  of  goods 
and  the  cost  of 
selling     the  m. 


Profit  requires 
a  fair  mark-up. 
Think  yourself 
bigger  than  any 
problem.  The 
most  complex 
problem  taken 
to  pieces  and 
analysed  in  de- 
tail is  then  no 
longer  form  i- 
dable. 


It  would  be  useless  to  analyze  all  the 
problems  I  tried  to  solve  in  that  branch 
store  during  the  next  six  months.  The 
two  examples  just  quoted  will  indicate 
my  general  direction.  I  was  grouping 
towards  certain  vital  facts.  I  wanted 
to  Imow  what  lines  were  paying  a  profit ; 
what  that  profit  was ;  and  what  it  cost  to 
sell  each  line.  My  average  mark-up 
had  been  about  thirty-five  per  cent.  On 
many  branded  articles  the  margin  al- 
lowed me  was  less  and  it  was  important 
for  me  to  know  whether  selling  expenses 
on  these  specialties  was  greater  or  less 
than  the  discount.  For  the  same  rea- 
son, I  needed  information  about  my 
clerks;  how  much  each  man  sold;  what 
kind  of  goods  he  sold;  and  how  much 
profit  each  man  made  for  the  store. 

The  basic  lesson,  of  course,  was  that 
of  selling  for  cash.  Next  in  importance 
was  the  division  of  stock  into  lines  or  de- 
partments and  the  computing  of  selling 
cost  and  net  profit  on  each  line.  Of 
methods  of  securing  efficiency  in  clerks, 
of  turning  stock  rapidly,  of  buying, 
store  arrangement  and  the  like,  my  ex- 
periments had  taught  me  little  directly 
applicable  to  the  main  store.  But  I 
sensed  the  importance  of  each  of  these 
matters;  I  had  learned  that  the  most 
complex  problem  could  be  solved  if  you 
simply  took  it  to  pieces  and  settled  the 
details  one  by  one. 


CHAPTER  X 

Bringing  a  Store  System  up  to 
Date 


WITHIN  a  few  months,  I  was 
ready  to  put  the  main  store  on  a 
cash  basis.  Rather,  I  was  so  convinced 
of  the  advantages  of  selling  for  cash 
that  I  could  not  wait  to  try  out  any 
more  detail  methods  at  the  branch.  Be- 
sddes,  the  big  store  needed  a  tonic  to 
help  it  through  the  dull  period  then  pre- 
vailing and  selling  for  cash  was  the  most 
surprising  change  in  policy  it  was  pos- 
sible to  adopt.  I  aLso  decided  to  take 
all  order  clerks  off  their  routes  and  to 
depend  solely  on  the  telephone  and  ad- 
vertising cards  for  our  business.  At 
the  last  minute,  however,  my  courage 
failed  me  as  regards  strictly  cash  sales. 
I  decided  that  it  was  better  not  to  burn 
all  my  bridges  behind  me  and  decided  to 
keep  a  select  list  of  customers  (about 
one  hundred  and  twenty-five)  on  a 
credit  basis,  with  the  distinct  understand- 


Success  in  in- 
creasing  the 
sales  of  any  re- 
tail business  de- 
pends on  keep- 
i  n  g  customers 
in  touch  with 
the  store. 


Use   all   the 

modern  me  t h- 
ods  at  your 
command.  The 
telephone  is  an 
excellent  sales- 
man. 


90 


FACTS— NOT  GUESS  WORK 


Have  a  definite 
plan  in  viexif  re- 
gar  din  g  a  c- 
counts  and  en- 
force it. 


Custom  and 
precedent  keep 
many  in  the  old 
rut. 


ing  in  each  case,  however,  that  the 
amount  should  be  paid  on  or  before  the 
fifth  of  each  month.  Should  any  ac- 
count be  not  paid  at  that  time,  the  credit 
was  to  be  discontinued  without  further 
notice. 

When  I  announced  this  new  plan,  two 
weeks  before  it  went  into  effect,  there 
were  many  who  prophesied  disaster. 
Women  would  not  be  bothered  paying 
cash  for  every  purchase,  my  friends 
warned  me.  They  were  accustomed  to 
write  checks  in  settlement  of  their 
monthly  bills  and  the  keeping  of  ready 
money  in  the  house  constantly  to  meet 
grocery  bills  would  strike  them  as  ab- 
surd. And  so  on,  at  length.  But  I  was 
satisfied  that  the  high  cost  of  living  was 
working  on  my  side  and  that  the  prices 
I  offered  would  bring  even  women 
around  to  the  cash-economy  view. 

All  my  advertising  insisted  on  the 
savings  cash  sales  made  for  the  con- 
sumer. Here,  for  example,  is  one  of  the 
little  economy  talks  I  put  out  at  the 
head  of  an  early  advertising  card: 


Tell  customers 
in  your  adver- 
tising the  rea- 
sons back  of 
your  prices  and 
store  policies. 


YOU,   THE   CONSUMER,  ARE   THE 
ONE  WHO  PAYS 

The  cost  of  doing  business  is  borne  by 
you.  Mistakes  in  trading  are  charged  up 
to  the  cost  of  doing  biisiness.  Who  pays 
it?  YOU!  The  merchant  who  uses  old- 
fashioned  methods,  who  keeps  an  unneces- 
sary  number  of   expensive   delivery   teams 


BRINGING  A   STORE  UP  TO  DATE 


91 


loafing  at  the  back  door  half  the  time,  who 
is  continually  standing  petty  losses  from 
his  credit  accounts,  whose  slip-shod  system 
allows  some  goods  to  go  out  without  being 
charged,  while  other  goods  spoil  or  get 
shop  worn  in  the  stock  room — that  mer- 
chant means  to  give  you  service. 

But  is  it  service?  ISN'T  IT  JUST  UN- 
NECESSARY EXPENSE  WHICH  HE 
PUTS  ON  YOUR  BILL?  Our  modern 
methods — no,  our  common  sense  methods 
— eliminate  this  useless  expense.  It  puts 
NEW  FRESH  MERCHANDISE  in  your 
house  at  the  lowest  possible  cost,  and  you 
save  the  difference. 

Telephone  700  Newton  West  and  let  us 
prove  to  you  that  our  groceries  are  abso- 
lutely standard  qualities,  our  meats,  butter, 
eggs,  and  so  on,  the  best  the  market  pro- 
duces, and  our  cash  prices  so  much  lower 
that  you  can  figure  many  dollars  in  savings 
each  week  and  month  you  buy  from  us. 

That  selling  talk  I  backed  up  with 
price  quotations  which  every  intelligent 
woman  knew  were  lower  than  she  had 
been  paying.  As  explained  before,  it 
was  a  season  of  lower  wholesale  prices 
on  meats,  fish  and  provisions,  and  my 
daily  "leaders"  gave  consumers  the  full 
benefit  of  the  market. 

From  the  first  day,  the  cash  payment 
plan  was  successful.  Sales  increased  tre- 
mendously. Likewise  our  troubles.  In 
five  weeks  the  system  which  sufficed  at 
the  branch  store  was  completely  de- 
moralized.     Six   more    clerks   were   en- 


Put  it  up  to 
the  consumer. 
Show  buyers 
truthful  and 
sensible  reasons 
for  something 
new  and  they 
are  quick  to 
help  out. 


This  retailer's 
experience  em- 
phasizes the  ne- 
cessity of  exact 
knowledge  i  n 
dete  rminin  g 
cash  prices. 


92 


FACTS— NOT  GUESS  WORK 


Correct  retail 
prices  depend 
on  actual  costs 
to  the  c  on- 
sumer.  To  fix 
them,  figures  on 
each  line  are 
needed. 


The  system  of 
dete  r  minin  g 
business  facts 
is  best  laid  out 
by  a  specialist 
in  retail  ac- 
counting. 


gaged  and  we  had  no  great  difficulty  in 
handling  orders  and  delivering  pur- 
chases. But  the  methods  of  checking 
sales'  and  cash  against  stock,  on  which  I 
was  depending  for  lowered  costs  even 
more  than  on  cash  selling,  broke  down 
completely. 

A  cashier  handled  all  the  money; 
there  was  no  dishonesty  or  willful  error ; 
but  I  couldn't  get  trustworthy  informa- 
tion on  what  we  were  doing  each  day. 
And  my  cash  prices,  my  whole  scheme 
of  business,  were  built  on  the  command 
of  facts  and  the  checking  of  mistakes. 
My  margin  of  profit  was  in  danger.  And 
every  day  I  kept  on  guessing  and  sales 
continued  to  mount,  the  danger  of  final 
failure  increased. 

Quick  action  was  imperative.  I 
couldn't  wait  to  figure  out  my  own  sys- 
tem for  handling,  checking  and  record- 
ing sales,  and  for  keeping  track  of  stock, 
C.  O.  D.  deliveries  and  the  individual 
efficiency  on  my  clerks.  Delay  might 
wreck  the  business.  It  was  up  to  me  to 
buy  a  store  system  ready-made.  So  I 
called  in  a  specialist  in  retail  accounting, 
told  him  what  I  needed  to  know  and 
gave  him  a  free  hand.  He  was  compe- 
tent, and  in  less  than  a  month  I  was 
getting  daily  reports  which  kept  me  in 
touch  with  the  important  details  of  my 
business. 

Here  was  safety,  all  right.    But  I  had 


BRINGING  A  STORE  UP  TO  DATE 


93 


begun  to  see  the  possibilities  of  a  busi- 
ness built  and  managed  on  a  basis  of 
exact  knowledge.  I  wanted  more  in- 
formation. Instead  of  two  or  three 
broad  divisions  of  sales  in  the  meat  mar- 
ket, for  example,  I  determined  to  find 
out  what  profit  was  being  made  on  each 
of  the  chief  items — beef,  lamb,  poultry, 
smoked  and  dried  meats,  fish,  butter, 
eggs,  and  milk  and  cream.  My  idea  was 
to  know  what  profit  each  of  these  paid 
every  week;  and  whether  any  one  of 
them  made  a  loss.  I  conceived  it  pos- 
sible to  divert  selling  effect  from  these 
unprofitable  lines  to  others,  which,  for 
the  time,  were  money  makers. 

Next,  I  departmentized  the  store,  and 
because  I  was  aware  that  the  human 
equation  was  standing  between  me  and 
certain  profits  which  were  going  astray, 
I  soon  came  to  see  automatic  scales,  cash 
registers  and  an  adding  machine  as 
money-saving  investments.  Four  late- 
type  scales  were  installed,  therefore,  to 
regulate  overweights  and  prevent  mis- 
takes in  charging.  Two  cash  registers 
gave  us  an  iron-clad  check  on  all  trans- 
actions with  customers. 

The  adding  machine  was  a  price  I 
paid  cheerfully  for  the  division  of  my 
daily  sales  by  departments  an  hour  after 
the  last  customer  had  been  served.  It 
also  gave  me  a  check  on  the  totals  shown 
by    each    cash    register. 


Human  mis- 
takes and weak- 
n  e  s  s  e  s  were 
eliminated  by 
adopting  the 
modern  b  usi- 
ness  tools. 


Know  wka t 
each  line  is  ad- 
ding to  your 
profits.  Then 
try  to  divert 
the  selling  to 
the  more  Prof- 
itable  Hne^. 


Not  to  remove 
t  e  m  p  t  a  t  io  ns 
from  employes 
is  to  be  as 
guilty  as  they. 


94 


FACTSr— NOT  GUESS  WORK 


A  daily  detailed 
report  giz'es  a 
check  on  sys- 
tems and  plans 
enabling  their 
continuation  or 
cessation  with 
the  knowledge 
that  you  are 
right. 


Correct  s  o  lu- 
tions  for  -new 
problems  form 
the  spotlight  of 
business.  They 
show  up  your 
ability  and 
judgment. 


This  daily  detailed  report,  in  fact,  was 
the  pulse  of  the  business,  and  was  care- 
fully studied.  Any  unusual  increase  or 
falling  off  in  a  department  was  shown 
up  the  day  it  happened.  Usually  the 
change  could  be  traced  to  some  specific 
cause.  If  favorable,  this  meant  the  con- 
finnation  of  some  buying,  selling  or  ad- 
vertising policy  or  device,  the  discovery 
of  a  new  slant  in  public  taste  or  a  new 
means  of  interesting  buyers.  When  a 
decrease  occurred,  the  information  was 
quite  as  valuable,  since  it  showed  up 
some  inefficiency  and  marked  stotk 
which  should  be  moved  at  once. 

Cash  sales  were  the  foundation  of  my 
new  plan  and  my  new  prosperity.  But 
cash  sales  had  their  drawbacks.  It  was 
inconvenient  for  women  whose  house- 
holds were  organized  on  a  basis  of 
monthly  bills,  to  keep  cash  for  daily 
grocery  bills.  I  had  waived  our  cash  rule 
for  more  than  a  hundred  of  our  regular 
customers.  To  keep  from  adding  to  this 
credit  list,  some  plan  had  to  be  devised 
for  removing  that  daily  worry  about 
money  for  the  grocer. 

For  those  who  found  cash  purchases 
difficult,  therefore,  I  adopted  a  credit  de- 
posit plan.  At  intervals  they  would 
send  me  a  check  and  draw  against  this 
deposit  with  each  order.  Before  it  was 
exhausted  we  notified  them  and  they 
renewed  it. 


CHAPTER  XI 

Fitting  Sales  Methods  to  the 
Customer 


To  modify  my  program  of  cash  sales 
and  hold  two  classes  of  customers, 
the  first  group  was  made  up  of  the 
cream  of  my  charge  accounts.  The  sec- 
ond group  was  allowed  to  make  a  de- 
posit, once  a  month  or  oftener,  and  order 
groceries  against  this  deposit.  This 
made  the  store  a  sort  of  grocery  bank; 
each  order  was  in  effect  a  check  which 
was  honored  in  foodstuffs. 

When  a  business  man  learns,  by  con- 
crete experience,  that  one  or  two  of  his 
main  policies  have  been  out  of  step  with 
facts,  he  is  apt  to  question  every  detail, 
plan  and  method  he  has  been  using. 
That  at  least  was  the  way  with  me.  I 
had  disregarded  eleven  years'  experi- 
ence and  much  disinterested  advice  when 
I  pitched  credit  selling  overboard.  Yet 
my  customers  were  paying  cash  for  pur- 
chases  and,   instead   of   losing  volume, 


Customers  can 
be  divided  into 
several  classes. 
Are  you  sure 
your  policies 
are  paying? 
Question  every 
detail  until  you 
have  exact 
knowledge. 


Finding  and 
c  0  r  r  e  c  tin  g 
zvaste  and  lost 
motion  may  re- 
veal many  mis- 
takes you  did 
not  know  ex- 
isted. 


95 


96 


FACTS— NOT  GUESS  WORK 


Delivery  prob- 
lems here  were 
largely  a  matter 
0  f  following 
precedence. 
Motor  trucks 
seemed  to  offer 
a  solution,  and 
were  adopted. 


The    extent    to 

which  custom- 
ers would  deny 
themselves  now 
became  the 
question  in  re- 
ducing delivery 
costs. 


sales  were  increasing  day  by  day. 

To  the  introduction  of  automatic  scales 
and  cash  registers,  ray  clerks  had  been 
hostile  and  my  trade  indifferent.  Both, 
however,  had  swiing  round  to  apprecia- 
tion of  the  savings  made  and  the  insur- 
ance against  mistakes.  My  new  adver- 
tising plan  had  proved  both  cheap  and 
efficient.  Every  change  had  been  for 
the  better ;  it  was  natural,  perhaps,  that 
in  some  of  my  subsequent  experiments, 
I  should  move  too  fast. 

Service  was  the  store  bug-bear.  Net 
profits  had  not  kept  pace  with  volume : 
chiefly  because  cut  prices  (the  key  of 
the  whole  program)  had  eaten  up  the 
savings  made,  and  expenses  had  main- 
tained a  certain  proportion  to  sales.  To 
take  care  of  the  new  business,  six  clerks 
had  been  added  and  our  delivery  wagons 
were  hard  pushed  to  handle  orders  on 
time.  I  was  certain  that  there  was  a 
tremendous  amount  of  lost  motion  and 
waste  effort  in  this  end  of  the  business, 
and  I  decided  to  find  and  correct  the 
causes.  After  many  months  I  was  still 
finding  and  correcting  them.  What  fol- 
lows here  is  a  summary  of  the  changes 
in  methods,  arrangement  and  equipment 
(some  of  them  were  not  final),  rather 
than  a  narrative  of  how  the  betterments 
were  made. 

My  first  big  operating  change,  for  in- 
stance, might  have  been  avoided  and  an 


REACHING  YOUR  TRADE 


97 


investment  of  nearly  $3,500  cut  out,  had 
I  known  six  months  earlier,  real  facts 
about  deliveries  and  the  education  of 
customers.  The  delivery  department 
was  the  first  investigated  simply  because 
it  was  so  costly  and  yet  hardly  able  to 
meet  service  demands. 

Nine-tenths  of  the  work  had  to  be 
done  in  about  five  hours,  and  my  five 
wagons  and  nine  horses  were  all  hard 
driven.  When  Mrs.  Scott  Blank,  four- 
teen blocks  from  the  store,  forgot  her 
luncheon  order  until  eleven-thirty,  noth- 
ing but  an  emergency  delivery  would 
satisfy  her  and  temper  the  family's 
hunger.  These  rush  trips  were  numer- 
ous and  speed  was  the  first  requisite.  So 
essential  in  fact  that  I  began  to  study 
motor  trucks,  and  after  several  demon- 
strations decided  to  replace  my  wagons 
with  gasoline  delivery  cars. 

I  bought  two  high-grade,  used  touring 
cars,  fitted  them  with  1,000  pound 
bodies,  and,  after  training  two  drivers, 
gave  up  wagon  deliveries  altogether. 
Each  motor  would  do  the  work  of  three 
wagons  and  in  emergencies  quite  out- 
class horses.  Later  I  added  another 
and  a  slower  truck  of  1,500  pounds 
capacity  for  hauling  butter,  eggs  and 
produce  from  our  Boston  markets  and 
picking  up  "wanted"  orders  at  the 
wholesale  houses.  This  car  was  also 
available  during  the  rush  hours. 


This  retailer 
would  have 
saved  $3,500  on 
one  investment, 
if  he  had  only 
secured  sales 
facts  earlier. 


What  you 
thought  was 
right  yesterday, 
may  be  eating 
up  your  profits 
today. 


98 


FACTS— NOT  GUESS  WORK 


Motor  trucks 
cut  deliz'ery 
costs  and  adver- 
tised the  store, 
yet  were  dis- 
pensed with  la- 
ter on  account 
of  expense. 


Innovations  can 
only  gradually 
he  introduced, 
and  diplomacy 
must  be  used. 


Our  motors  saved  money  from  the 
first.  They  displaced  four  drivers,  who 
made  from  $13  to  $15  a  week,  and  their 
maintenance  cost  never  equalled  that  of 
the  nine  horses  and  five  w^agons  I  had 
been  using.  They  had  distinct  advertis- 
ing value  and  helped,  I  think,  to  estab- 
lish the  standing  of  the  store  with  many 
of  the  new  customers  we  gained  during 
the  autumn  and  winter.  Yet  they,  too, 
were  discarded  in  their  turn,  and  gave 
way  to  the  wagons  which  had  formerly 
been  used. 

Wty?  Simply  because  I  took  another 
step  forward  in  the  standardizing  of  de- 
liveries. After  noting  the  daily  mileage 
of  our  motors  for  a  couple  of  months,  it 
struck  me  that  the  distances  traveled 
were  absurdly  high  for  the  small  area 
covered.  Five-sixths  of  our  customers 
lived  within  a  mile  of  the  store,  yet  the 
records  showed  that  the  cars  frequently 
made  fifty  to  fifty-five  miles  each  day. 

How  much  of  this  was  service  that 
could  be  dispensed  Avith  ?  At  the  branch 
store,  I  had  added  a  delivery  on  three 
half  days  per  week  for  orders  of  $2.00 
or  over.  Customers  w^ere  getting  along 
with  this  restricted  service  without  any 
apparent  difficulty.  Could  we  adapt 
this  idea  of  scheduled  deliveries  to  the 
more  exacting  patrons  of  the  main  store  ? 
I  determined  to  try.  And  as  "usual,  I 
employed  our  weekly  advertising  card  to 


EEACHING  YOUR  TRADE 


99 


"sell"  the  new  plan  to  customers.  Few 
of  these  cards  had  gone  out  during  the 
year  without  a  little  "selling  talk"  of 
some  sort  at  the  head  of  one  page  and 
people  had  grown  accustomed  to  reading 
and  sometimes  acting  on  them.  Four 
routes  were  described  and  a  time  sched- 
ule for  each  given. 

A  week  before  the  change,  with  the 
regular  weekly  sales  card,  each  customer 
and  prospect  received  a  "Route  Sched- 
ule" card  to  hang  up  near  her  tele- 
phone. It  bore  our  telephone  number, 
of  course,  but  the  important  feature  was 
the  list  of  our  closing  hours  for  each 
route.  The  personal  application  was 
brought  home  by  writing  her  name  in 
the  blank  space  opposite  her  route,  which 
was  further  distinguished  by  a  heavy 
cross. 

To  induce  customers  to  co-operate  in 
cutting  down  service  is  not  an  easy  task. 
We  had  many  "regulars"  whom  we 
couldn  't  afford  to  offend :  these  we  had 
to  "break  in"  gradually  to  the  new 
order  of  things  and  we  continued  to 
make  special  deliveries  whenever  such 
were  necessary.  The  emergency  speed  of 
the  motor  cars  took  care  of  this  phase  of 
delivery,  but  I  was  after  the  savings  of 
a  standardized  service  and  we  kept  up 
the  work  of  educating  customers  to  the 
habit  of  ordering  on  time. 

From  many  of  our  patrons  we  had 


Customers'^ 

names  on  each 
route  card  —  a 
strong  personal 
appeal  —  aided 
in  getting  the 
plan  thoroughly 
understood. 


Once  fixed,  the 
change  was 
readily  adopted. 
Aiding  those 
habitually  late 
to  order  on 
time  eliminated 
hard  feelings 
and  insured  the 
orders. 


100 


FACTS— NOT  GUESS  WORK 


Still  enabled  to 
deal  with  her 
favorite  clerk 
by  telephone, 
the  women  ac- 
cepted the  new 
idea  and  really 
got  better  serv- 
ice. 


By  holding 
nothing  too  cer- 
tain to  admit 
of  doubt,  this 
retailer  found 
motor  delivery 
too  expensive. 


been  taking  telephone  orders  for  some 
time,  calling  them  at  a  fixed  hour  and  so 
saving  them  telephone  tolls.  It  was  a 
natural  step  now  to  add  to  this  calling 
list  the  women  who  could  not  be  de- 
pended upon  to  get  their  lists  in 
promptly. 

To  expedite  the  taking  of  orders,  I  put 
in  the  simplest  form  of  private  telephone 
exchange,  one  that  the  cashier  could 
operate  without  interference  with  her 
regular  duties,  and"  persuaded  my  three 
former  ''route"  men  to  sell  "personal 
service"  over  the  'phorc  to  their  clients. 
The  advantages  were  real:  the  customer 
would  continue  to  deal  with  her  favorite 
clerk;  she  could  trust  him  as  much  one 
way  as  the  other,  while  by  taking  and 
filling  her  order  early  in  the  morning 
before  fruits,  vegetables,  and  so  on  were 
"picked  over"  by  cross-counter  buyers, 
he  could  give  her  much  better  values 
than  were  available  later.  These  argu- 
ments carried  weight.  We  lost  only  a 
few  patrons  by  the  change  while  the  re- 
duction in  expense  was  radical. 

By  the  time  my  scheduled  delivery 
plan  was  working  satisfactorily,  I  had 
made  another  discovery.  It  was  that 
there  was  too  little  work  to  keep  my 
motor  cars  busy.  The  cost  of  up-keep 
and  maintenance  had  been  reduced,  but 
I  had  progressed  to  the  stage  where  no 
method  was  too  sacred  to  be  investigated. 


REACHING  YOUR  TRADE 


101 


One  of  our  new  motor  drivers  was  in- 
efficient. While  his  car  went  into  the 
shop  for  repairs,  I  tried  making  deliver- 
ies on  his  routes  by  wagon.  Under  the 
fixed  schedules,  I  found  that  a  horse  and 
wagon  could  do  all  that  was  demanded. 
My  cost  sheet  showed  that  each  motor 
was  much  more  expensive  to  maintain 
than  a  horse  and  wagon. 

Before  changing  back,  however,  I 
made  a  full  month's  test,  running  a 
motor  on  one  pair  of  routes,  a  wagon  on 
the  other.  I  also  tried  to  make  all  de- 
liveries with  one  motor.  But  because  of 
the  relatively  short  hauls  and  the  hun- 
dreds of  stops  the  horses  did  the  work 
more  cheaply.  The  figures  were  conclu- 
sive: though  it  involved  what  some  ad- 
visers looked  on  as  a  backward  step,  I  re- 
turned to  wagon  deliveries.  The  consol- 
ing fact  to  me  was  that,  through  my  ex- 
perimenting, I  had  discovered  a  way  to 
make  my  deliveries  with  two  wagons  and 
three  horses  where  before  five  wagons 
and  nine  horses  had  been  necessary. 

Once  a  man  lays  hold  of  the  fact  that 
yesterday's  right  way  may  be  losing 
some  of  to-day's  profits,  he  is  likely  to 
carry  his  weighing  and  testing  into  every 
department  of  his  business.  Each  bet- 
terment also  provides  a  sort  of  foot- 
rule  to  measure  up  the  deficient  methods 
with  which  it  is  surrounded.  Our  auto- 
matic scales,  for  instance,  our  cash  regis- 


Fifty  miles  a 
day  and  five- 
sixths  of  the 
customers  with- 
in a  mile  of  the 
store.  T ha  t's 
■why  motors 
were  taken  off. 


Three  horses 
and  two  wagons 
supplanted  the 
motors,  where- 
as nine  horses 
and  five  wag- 
ons were  used 
at  first.  This 
shows  the  re- 
sult of  actual 
investigation. 


102 


FACTS— NOT  GUESS  WORK 


The  solution  of 
one  {Problem  iin- 
coz'crcd  anoth- 
er. One  defect 
often  covers 
several,  zvhile 
only  the  visible 
one  is  known. 


Carrying  stocks 
in  the  most  con- 
venient place 
for  filling  de- 
liveries allowed 
attractive  dis- 
plays. 


ters  and  adding  machines,  by  their  swift, 
error-proof  operations  made  the  awk- 
ward, round-about  routine  of  fillinij  and 
handling  orders  in  the  store  stand  out 
' '  like  a  sore  thumb, ' ' 

Our  sales  had  doubled  at  the  end  of 
the  ninth  month,  but  with  six  extra 
clerks  we  were  hindering  one  another  at 
every  turn.  Either  we  had  to  secure 
more  room  or  make  better  use  of  what 
we  had.  But  the  two  storerooms  could 
not  be  enlarged  without  costly  structural 
changes.  Therefore,  the  second  expedi- 
ent was  our  choice. 

Re-arrangement  of  departments  and 
careful  selection  of  display  stocks  was 
the  first  step  taken.  Practically  the  gro- 
cery store  w^as  turned  into  a  big  sample 
room;  we  sold  the  samples  and  replen- 
ished the  stock  on  shelves  and  in  cases 
after  the  day's  selling  was  done.  This 
allowed  us  to  display  stock  attractively, 
wdthout  crowding,  and  insured  a  con- 
stant display  of  fresh  goods.  I  do  not 
mean  that  we  showed  only  two  or  three 
bottles  of  this,  half  a  dozen  cans  of 
that,  but  simply  that  we  struck  a  bal- 
ance between  space,  stock  accessibility 
and  effective  display  and  restored  this 
balance  daily. 

Our  stock  of  staples,  for  example,  was 
carried  almost  entirely  in  the  shipping 
room.  We  displayed  a  sample  lot  of 
stock  of  everything  we  sold  where  the 


REACHING  YOUR  TRADE 


103 


customer  could  see  and  handle  it.  When 
we  ran  anything  as  a  "leader"  for  the 
day,  we  usually  piled  up  an  impressive 
quantity  in  the  place  reserved  for  display 
of  leaders.  But  when  a  woman  ordered 
five  ipounds  of  sugar  or  a  quarter's 
worth  of  beans,  either  in  the  store  or  by 
telephone,  the  stuff  was  weighed  out  on 
the  spot  only  when  she  wanted  to  take  it 
away  with  her.  When  the  order  was  to 
be  delivered,  the  clerk  simply  put  down 
all  the  items,  with  the  prices  and  totals 
and  gave  her  a  cash  register  cheek  show- 
ing the  amount  and  character  of  the 
sale.  '  If  it  was  a  cash  transaction,  she 
paid  at  the  desk  as  she  went  out. 

In  filling  the  order,  this  plan  in- 
creased the  efSciency  of  the  most  valu- 
able space  and  time  by  unloading  work 
on  space  and  time  worth  less  than  one- 
third  as  much.  The  clerk,  for  instance, 
in  mailing  up  an  order  ran  through  it 
to  see  how  many  items  could  be  filled 
from  the  ready-wrapped  packages  in 
stock  in  the  shipping  room. 

Orders  for  staples,  in  the  mam,  ran  to 
standard  quantities — five  or  ten  pounds 
of  sugar,  a  quarter's  worth  of  rice,  one 
or  two  pounds  of  coffee  or  a  quarter- 
pound  of  tea.  Weighing  and  wrapping 
these  quantities  during  the  early  morn- 
ing or  the  afternoon  before,  they  can  be 
piled  up  on  shelves  in  the  shipping 
room  for  instant  use   during  the  rush 


Having  various 
quantifies  o  f 
package  goods 
wrapped  and 
ready  for  use 
saves  time  and 
finds  work  for 
idle  hands  in 
slack  hours. 


Steps  saved  on 
orders  cut  the 
expense  and 
swelled  the 
profits. 


You  ozv  c  as 
much  to  your 
clerks  as  to 
your  customers. 
Without  judi- 
cious arrange- 
ment of  goods 
and  modern 
equipment,  they 
can't  he  efficient. 


104 


FACTS— NOT  GUESS  WORK 


Ten  per  cent 
chopped  off 
prices  for  the 
benefit  of  cus- 
tomers. Yet  the 
store  made 
greater  profits 
and  gained  a 
stability  u  n- 
known  before. 


The  right  mer- 
chandise, at  the 
right  time  and 
in  the  right 
quantity,  is  a 
good  rule  for 
the  retailer. 


hours  when  every  minute  is  needed  for 
serving:  customers.  Knowing  what  is  in 
this  package  stock,  the  clerk  who  fills  an 
order  simply  selects  or  measures  the  ar- 
ticles not  on  the  shipping  room  shelves, 
assembles  them,  checks  these  items  on 
the  order,  puts  the  carbon  duplicate  with 
the  goods  and  sends  the  first  copy  to  the 
shipping  room  to  be  completed  from  the 
package  stock  kept  there  for  just  this 
purpose. 

Twenty  steps,  on  the  average,  were 
saved  on  each  order.  Allowing  for  the 
time  previously  lost  by  clerks  waiting 
their  turn  at  scales,  sugar  barrels,  and 
so  on,  at  least  two  minutes  were  saved 
on  every  sale.  The  steps  and  the  min- 
utes saved  made  for  space  efficiency  and 
allowed  us  to  handle,  without  any  great 
difficulty,  a  doubled,  and  a  trebled  busi- 
ness in  the  original  store  space. 

The  largest  saving  on  the  cost 
sheet,  however,  came  through  the  in- 
creased efficiency  of  clerks.  Before 
re-organization,  the  store  was  selling 
about  $37,000  annually  with  nine  em- 
ployees. At  the  height  of  our  conges- 
tion in  all  departments,  with  sales 
about  double,  the  pay  roll  carried 
tw^enty-four.  For  the  greater  part  of 
last  year,  when  total  sales  amounted  to 
$127,000  the  work  was  done  by  eleven 
men  in  the  store  and  on  delivery  wagons 
and  two  girls. 


CHAPTER  XII 


Buying  to  Suit  the  Trade 


WHEN  a  retail  grocer  "turns"  his 
stock  twenty  times  a  year,  it  means 
simply  that  he  has  been  buying  what 
his  customers  want,  in  the  quantities 
they  need,  and  at  prices  they  are  willing 
to  pay. 

To  strike  this  balance  between  stock 
and  the  consuming  needs  of  his  trade, 
he  must  know  three  things: 

(1)  Wliat  will  appeal  to  the  appetite 
and  satisfy  the  quality  and  value  stand- 
ards of  his  customers. 

(2)  What  offerings  in  the  current 
wholesale  markets — meats,  staple  grocer- 
ies, produce,  fruits,  fish,  delicacies — will 
match  up  with  these  consumer  require- 
ments. 

(3)  iWhat  quantities  of  seasoned 
foodstuffs  his  trade  can  and  will  make 
immediate  use  of  at  attractive  prices. 

In  some  degree  every  grocer  gathers 
and  makes  use  of  this  kind  of  informa- 


'Buy  judiciously, 
study  your  pa- 
trons and  antic- 
ipate their  de- 
sires. Many 
"turns"  a  year 
depend  entirely 
upon  this. 


It  is  no  more 
than  good  busi- 
ness to  repre- 
sent your  cus- 
tomers in  the 
wholesale 
stores  and  to 
buy  in  market 
as  they  prob- 
ably would  in- 
dividually. 


105 


106 


FACTS—NOT  GUESS  WORK 


Did  you  ever 
have  stock  on 
hand  zvhich  you 
couldn't  get  rid 
off  Here's  a 
retailer's  prac- 
t  i  c  a  I  sugges- 
tions for  sell- 
ing slow  stock. 


Unless  you  look 
ahead  of  your 
competitors,you 
will  always  be 
a  laggard. 


Be  the  purchas- 
ing agent  for 
your  c  0  mm  u- 
nity.  Catching 
the  "snaps"  of 
the  wholesale 
houses  is  easy. 
Don't  guess  on 
the  market,  or 
you'll  lose. 


tiou  in  his  purchasing.  He  need  not  be 
a  wizard  to  install  a  stockkeeping  sys- 
tem that  brings  to  his  attention  any 
item  which  is  wearing  out  its  welcome 
on  his  shelves,  will  warn  him  against  re- 
ordering it  and  will  suggest  a  cut  price 
or  some  other  means  of  selling  it.  With 
a  little  patience  and  industry,  he  can 
keep  weekly  records  of  sales  in  the  prin- 
cipal lines  he  handles,  and  so  have  trust- 
worthy figures  on  which  to  base  his 
quantity  estimates  for  the  next  week  and 
for  corresponding  weeks  in  succeeding 
years.  If  he  is  civil  to  the  jobber's 
salesmen  who  call  on  him  and  fairly 
sound  in  judgment,  he  can  stock  his 
goods  at  the  average  market  prices,  and 
thus  be  prepared  to  do  business  on  the 
average  margin  and  take  an  average 
profit. 

All  this,  however,  is  only  the  defensive 
side  of  buying.  If  he  is  going  to  sell 
every  week  half  as  much  as  his  store  eon- 
tains  (and  it  is  bound  to  contain  a 
great  bulk  of  staple  foodstuffs  which  he 
must  buy  in  large  quantities  in  order  to 
secure  a  price)  he  must  do  more  than 
trail  his  customers  likes  and  dislikes. 
He  must  anticipate  both  and  frame  his 
orders  accordingly. 

When  he  buys,  he  must  size  up  the 
market  from  the  customer's  viewpoint. 
For  the  time,  if  he  is  going  to  make  the 
most  of  his  business,  he  must  forget  that 


WATCHING  YOUR  MARKET 


107 


he  is  a  grocer  and  become  a  sort  of  pur- 
chasing agent  for  his  community. 
Hardly  a  day  passes  that  the  grocer  in 
touch  with  a  big  wholesale  market  is  not 
offered  a  real  buying  opportunity,  if  he 
has  the  wit  and  knowledge  to  recognize 
it. 

It  may  be  a  "snap" — a  carload  of 
standard  canned  goods,  or  potatoes,  ap- 
ples, flour,  on  which  some  jobber  is 
willing  to  sacrifice  his  profit.  Or  it  may 
be  a  distinct  lowering  of  prices  in  certain 
classes  of  foods  as  compared  with  other 
staple  lines.  Decision  is  easy  in  the  case 
of  the  "snap."  But  when  it  comes  to 
sizing  up  a  sagging  market  on  a  staple 
and  deciding  how  many  extra  bushels  or 
hundred-weight  your  customers  will  ab- 
sorb at  the  lower  price,  the  man  who 
merely  guesses  will  go  wrong  often 
enough  to  cancel  the  profit  netted  when 
his  guesses  prove  up  right. 

In  other  words,  the  business  men — 
grocer,  dry  goods  man,  hardware  dealer 
or  druggist — must  be  able  to  create  his 
"oMTi"  snaps,  instead  of  depending  on 
the  emergencies  of  the  wholesale  or  com- 
mission house  to  provide  them  for  him. 

Flour,  for  example,  is  not  the  sort  of 
staple  that  suburban  housewives  buy 
often  in  the  wood.  They  order  bakery 
goods,  bread,  cakes,  rolls  and  the  like, 
and  their  purchases  of  flour,  in  the  main, 
are  of  small  quantities  and  of  special 


Create  your 
own  "snaps"  if 
none  are  of- 
fered by  the 
market.  But  it 
is  unsafe  to 
guess.  You 
should  study 
the  wholesale 
market  for 
sags. 


Here's  how  a 
retailer  placed 
thirty -five  ex- 
tra barrels  of 
flour  among  his 
trade  during  a 
dull  period.  Try 
it  out.  The  plan 
entails  the  use 
of  clerks  dur- 
ing a  slack  pe- 
riod. 


108 


FACTS— NOT  GUESS  WORK 


A  quick  "turn," 
a  substantial 
profit  and  a  low 
price  that  ad- 
V  e  r  t  is  e  s  the 
store  are  the 
entire  profits  of 
the  deal. 


Knowing  his 
customer's 
consuming  ca- 
pacity for  three, 
six  or  twelve 
months,  by  the 
sales  record, 
made  this" turn'' 
possible  on  busi- 
ness  principles. 


kinds  — cake  flour  for  instance.  Yet  in 
twenty-four  hours  last  spring,  I  placed 
no  less  than  thirty-five  barrels  of  flour 
in  the  district  covered  by  my  main  and 
branch  stores.  It  was  a  standard  Min- 
nesota brand,  the  kind  and  quality  I  sell 
and  advertise  to  my  regular  trade.  It 
was  very  cheap,  however,  by  comparison 
with  what  my  customers  had  been  pay- 
ing for  their  flour  in  twenty-five  and 
fifty-pound  sacks. 

We  were  having  a  dull  week,  the  after- 
math of  a  holiday  rush,  and  I  could  re- 
lease three  or  four  of  my  clerks  for  so- 
liciting without  sacrificing  store  service. 
My  men  couldn't  see  why  any  of  our 
regular  customers  would  want  so  large 
a  quantity  as  a  barrel  of  flour.  It  was 
my  task,  therefore,  to  tell  them  the  price 
advantages  of  such  a  large  purchase 
before  they  started  out.  I  did  it  by  com- 
paring the  package  price  with  that  they 
would  be  able  to  offer  our  customers  for 
flour  in  the  wood.  From  my  records,  I 
showed  them  that  any  number  of 
families  in  town  were  buying  the  equiv- 
alent of  a  barrel  of  flour  every  three  or 
four  or  six  months.  I  explained  to  them 
the  low  ebb  in  the  store's  sales  and  put 
it  up  to  them  to  bring  in  the  orders. 

I  had  bought  only  twenty  barrels  of 
flour.  In  a  little  less  than  one  full  work- 
ing day,  between  four  o'clock  one  after- 
noon and  three  the  next,  they  disposed 


WATCHING  YOUR  IMARKET 


109 


of  thirty-five  barrels.  The  business  was, 
you  might  say,  "pure  velvet."  The 
flour  never  entered  our  stock  room,  but 
was  delivered  direct  from  the  ear  in 
which  it  came  out.  The  combination  of 
a  low  wholesale  price,  minimum  hand- 
ling charges  and  no  overhead  whatever, 
allowed  me  to  quote  an  attractive  low 
price  and  yet  make  a  very  substantial 
profit  on  the  ' '  turn, ' ' 

This  special  sale  illustrates  what  I 
mean  by  buying  on  the  strejigth  of  ac- 
curate knowledge  of  my  territory's  con- 
suming capacity.  I  could  figure  out  the 
total  of  my  flour  sales  in  quantities  for 
three,  six  or  twelve  months  of  the  pre- 
ceding year.  I  knew  the  temper  of  the 
housewives  I  aimed  at,  their  fixed  de- 
termination to  reduce  the  cost  of  living 
and  their  natural  eagerness  to  secure  a 
bargain  in  a  staple  like  flour.  Simple 
mathematics  did  the  rest.  I  played  safe 
by  buying  only  twenty  barrels.  The  price 
that  I  could  quote  was  so  attractive  that 
nearly  twice  as  many  women  saw  my  of- 
fer in  the  same  light  as  I  saw  it  myself. 

Keeping  in  daily  touch  with  the  whole- 
sale markets  helps  me  to  keep  my  retail 
prices  right  as  well  as  to  buy  when 
wholesale  prices  are  low.  On  beef,  for 
instance,  there  was  an  exceptionally 
high  range  of  prices  for  'a  year.  In 
the  old  days  it  was  my  method — and 
I  expect  it  is  the  method  of  a  good  many 


The  stock  com- 
bination m  u  - 
tually  attractive 
to  dealer  and 
customer  is  a 
low  wholesale 
price,  minimum 
handling 
charges  and  no 
overhead  what- 
ever. 


Do  you  fix  your 
price  on  stock 
entirely  from 
cost?  Then 
you're  losing 
money.  This  re- 
tailer found  it 
consistent  t  o 
follow  the 
zvholesalc  mar- 
ket. 


11» 


FACTS— NOT  GUESS  WORK 


Accept ab  I  e 
qualities  and  the 
best  values  vAn 
trade.  Buying 
governs  them. 
By  purchasing 
as  if  especially 
for  individuals 
of  his  trade, 
this  merchant 
won  patronage. 


Unless  you  are 
able  to  follow 
them  closely, 
downward 
shifts  in  whole- 
sale price  lev- 
els may  catch 
you  unawares 
and  force  you 
to  move  stock 
at  a  loss. 


grocers  and  market  men — to  raise  retail 
prices  wheu  the  cheaper  stock  in  the  ice 
box  began  to  be  exhausted  and  the 
higher-priced  quarters  were  brought  out 
on  the  cutting  blocks.  Those  intervals 
might  be  a  week  or  even  longer.  The 
consumer,  of  course,  profited  by  the  delay 
but  usually  took  no  notice  of  his  sav- 
ings. When,  however,  beef  sought  a 
lower  price  level,  my  customers  were 
never  willing  to  let  me  clear  my  high- 
priced  meat  out  of  the  "cooler"  before 
they  demanded  a  reduction.  Like  many 
other  dealers,  I  was  trailing  the  market 
and  losing  on  every  price  advance  be- 
cause I  didn't  raise  and  lower  prices 
with  the  wholesale  market. 

By  keeping  in  touch  with  the  market, 
however,  any  rise  or  reduction  in  price 
comes  to  my  attention  at  once,  and  ex- 
cept where  I  have  advertised  a  "special" 
for  which  the  stock  is  bought,  the  prop- 
er advance  or  reduction  is  made.  I  can 
also  compare  the  value  level  of  all  the 
competing  foods  on  the  market,  and  so 
shape  my  buying  and  selling  program 
for  the  next  day  in  order  to  take  ad- 
vantage of  every  change  in  the  whole- 
sale prices  and  buy  with  the  purpose  of 
supplying  just  those  meats  or  eggs  or 
fish  which  my  customers,  if  they  knew 
the  wholesale  market,  would  buy  them- 
selves. This,  of  course,  is  merely  good 
business ;  the  retailer  who  offers  accept- 


WATCHING  YOUR  MARKET 


111 


able  qualities  and  the  best  values  is 
bound  to  get  the  bulk  of  the  business. 

,The  daily  report  on  which  I  rely  for 
the  sales  of  my  business  was  the  result 
of  a  visit  to  a  hospital.  "While  I  was 
waiting  in  an  ante-room,  I  noticed  one  of 
the  doctors  studying  every  detail  of  a 
chart  handed  to  liim  by  a  nurse.  A  few 
questions  brought  out  the  fact  that  its 
use  enabled  him  to  prescribe  intelli- 
gently, since  he  had  a  picture  of  the  ac- 
tual conditions  and  tendencies  before 
him  on  the  chart. 

Thereafter,  that  chart  bothered  me  for 
several  days.  Why  not  adopt  the  idea  my- 
self, treating  my  business  as  a  patient 
and  prescribing  from  day  to  day  on  a 
basis  of  real  information  and  detail  fig- 
ures ?  The  outcome  was  the  daily  report 
sheet,  which  certainly  gives  me  the  vital 
statistics  and  symptoms  of  each  depart- 
ment. Comparison  with  previous  years 
enables  me  to  make  a  pretty  close  esti- 
mate of  what  my  purchases  should  be  in 
each  department,  of  the  price  I  can  pay, 
and  the  quantities  my  customers  are 
likely  to  absorb  at  prices  based  on  these 
delivered  costs. 

Soon  after  I  started  the  branch  store 
I  began  to  take  a  weekly  inventory  in 
order  to  check  the  stock  on  hand  against 
that  received  and  sold.  For  the  branch 
this  was  not  difficult,  but  when  I  at- 
tempted to  apply  the  same  method  to 


A  doctor,  a  hos- 
pital and  a  chart 
gave  this  retail- 
er a  valuable 
idea. 


Treat  your  pa- 
tient, ivhich  is 
business,  a  c  - 
cording  to  the 
chart  of  your 
sales,  zv  h  i  c  h 
should  give 
complete"  symp- 
toms" and  sta- 
tistics. 


I  nv  e  nt  o  ries 
check  careless 
measuring  b  y 
clerks.  A  suit- 
ab  I  e  interval 
betzveen  inven- 
tories is  usual- 
h  a  month. 


112 


FACTS— NOT   GUESS  WORK 


"A  monthly  in- 
ventory gave  an 
exact  check  on 
stock.  The  dis- 
crepancies were 
small  because 
every  clerk  had 
been  trained  in 
giving  full,  but 
not  extra,  meas- 
ure. 


Special  sales 
cut  profits,  but 
if  investigated 
give  valuable  in- 
formatioti  about 
slow  moving 
stock.  They 
check  against 
blunders  in  the 
future. 


the  main  store  I  soon  found  that  the  re- 
sult did  not  repay  the  extra  effort.  By 
convincing  my  clerks  that  I  was  in 
earnest  in  my  demand  for  accurate  meas- 
ure and  no  more,  however,  this  weekly 
check  on  stock  had  been  so  successful 
that  I  disliked  to  give  it  up.  The  re- 
sult was  a  compromise ;  a  monthly  in- 
ventory was  begun. 

Compared  with  the  old  method  of  tak- 
ing inventory  at  the  end  of  the  year, 
this  seemed  like  a  big  doubling  up  of 
work.  But  I  had  set  out  to  know  what 
my  business  was  doing,  and  to  know  it 
accurately  and  intimately.  So  while  the 
expense  of  taking  the  inventory  was  an 
addition  to  my  running  costs,  yet  I  felt 
that  the  information  was  worth  the  extra 
effort  and  outlay.  Experience  soon 
showed  that  the  variations  on  the  month's 
business  were  very  little  greater  than 
the  average  of  the  discrepancies  in 
stock  bought  and  sold  at  the  branch 
store,  as  shown  by  the  weekly  inventory 
there.  By  this  time,  too  —  it  was  now 
nearly  three  years  since  I  stopped  guess- 
ing— my  clerks  had  become  trained  to 
the  tale  of  full  weight  but  no  extra  meas- 
ure. Accuracy  has  become  almost  sec- 
ond nature.  The  inventory  is  simply  in- 
surance against  lapsing  back  into  the  old 
habits  with  their  attendant  losses  and 
leaks. 

When  I  find  from  the  inventory  that 


WATCHING  YOUR  MARKET 


113 


an  article  is  not  moving  as  it  should,  it 
is  an  easy  matter  to  run  a  ' '  special  sale ' ' 
on  it  and  to  profit  by  the  knowledge  that 
it  is  a  "sticker,"  after  the  stock  has 
been  reduced  to  the  proper  figure.  Thus 
the  inventory  acts  both  as  a  safety  sig- 
nal against  over-stocking,  and  an  ac- 
curate guide  in  buying.  It  measures 
qualities,  quantities  and  the  salability 
of  every  item  in  stock.  In  all  cases  the 
records  show  what  lines  to  push,  and 
what  is  more  vital,  what  lines  to  drop 
or  carry  in  minimum  quantities. 

"Whether  an  order  is  received  over  the 
'phone  or  given  in  person  by  the  cus- 
tomer, it  is  filled  out  on  the  same  blank. 
This  is  similar  to  the  duplicate  sale  slips 
in  use  in  most  groceries,  except  for  the 
fact  that  it  has  a  space  at  the  top  for 
the  number  of  the  person  taking  the 
order,  and  at  the  bottom  for  the  number 
of  the  driver  delivering  it.  This  is 
simply  another  check  to  secure  personal 
responsibility. 

In  the  filling  of  the  orders,  too,  the 
same  principle  is  followed.  If  clerk  No. 
4  fills  out  part  of  an  order,  he  places  his 
number  in  the  first  column  opposite 
these  items.  Besides  making  possible  a 
direct  check-back  in  case  of  error,  this 
permits  more  than  one  clerk  to  work  on 
rush  orders,  yet  prevents  both  working 
on  the  same  items.  When  delivery  is 
made  across  counter  to  a  customer,  a 


A  duplicate 
sales  slip  which 
also  gives  a 
check  on  the 
receiving  clerk 
and  the  clerks 
who  fill  the  or- 
der was  used 
by  this  retailer 
with  success. 


Cash  selling  and 
economical,  ef- 
ficient store  ser- 
vice brought 
success  to  Dar- 
rell  after  he 
"found  out." 
He  got  out  of 
the  rut  by 
studying  the 
details  of  his 
business. 


114 


FACTS— NOT  GUESS  WORK 


Not  being 
afraid  to  know 
your  failures, 
that  you  may 
remedy  them, is 
good  retailing. 


Constantivatch- 
ing  prevents  re- 
turning to  old 
ruts,  the  most 
dangerous  thing 
to  the  security 
of  successful 
business. 


check  mark  indicates  the  number  of  the 
clerk  who  handled  the  sale. 

It  took  practically  three  years  to  cast 
aside  my  old  "  rule-of- thumb "  methods 
and  begin  doing  business  on  a  basis 
of  accurate  knowledge.  My  general 
policy  and  many  of  my  experiences  and 
experiments  have  been  outlined  here  at 
greater  length,  perhaps,  than  they  de- 
serve. The  big  lessons  of  these  experi- 
ences have  been  the  importance  of  sell- 
ing for  cash  and  the  advantage  of  pro- 
viding as  economical  yet  intelligent  a 
store  service  as  the  demands  of  my  cus- 
tomers would  allow.  Both  have  meant 
the  development  of  better  and  more  sys- 
tematic business  methods. 

The  process  of  evolution  from  the  old 
to  the  new  still  continues.  I  never  let 
myself  be  absolutely  satisfied  with  any 
method  until  I  have  assured  myself  that 
it  is  sound  by  careful  tests.  There  is  too 
much  danger  of  falling  back  into  the  old 
rut  of  guessing,  for  me  not  to  beware 
of  the  easy  way.  But  the  fact  that  time 
has  proved  the  wisdom  of  my  original 
changes,  adds  a  feeling  of  confidence  in 
my  efforts  at  analysis  and  the  decisions 
based  upon  them.  Having  met  similar 
problems  in  the  past,  I  can  go  at  the 
new  ones  with  more  assurance  and  with 
a  better  idea  of  how  to  get  the  informa- 
tion I  need  and  how  to  analyze  the  facts 
when  I  do  secure  them. 


Part  IV 


MANAGING  STOCKS  AND 
EMPLOYES 


Advertise  to  Your  Men 

T  ESS  than  three  per  cent  of  all  retail  sales- 
*-^  men  are  skilled  at  this  trade.  The  other 
ninety-seven  per  cent  are  working  along  in 
the  dark — faithfully  perhaps,  but  ignorantly, 
thoughtlessly,  blindly.  They  may  see  their 
wage  and  your  clock;  but  their  work,  their 
chance,  your  need,  are  beyond  their  view. 

Only  when  you  supervise  your  salespeople 
as  you  are  supervising  your  stocks — with  tact, 
with  resource,  with  judgment — will  you  have 
an  eflScient  selling  force,  working  open-eyed 
towards  the  success  of  your  business. 

Efficiency  can  be  made;  skill  can  be  instilled; 
loyalty  and  interest  can  be  aroused.  You  can 
train  and  fit  your  men  to  their  places — but 
you  must  share  with  them  your  enthusiasm, 
your  knowledge,  your  loyalty. 

Responsibility  sobers  men.  Opportunity  stirs 
ambition.     Demand  for  men  shapes  supply. 

Get  your  men  to  thinking.  Advertise  your 
business  to  them.  Tell  them  your  needs  and 
their  chances.     Make  them  look  ahead. 

Build  your  men  and  they  will  build  your 
business. 

1^  a 


■  II 


;ii 


TESTING  FOR  ERRORS  IN  STORE 
MANAGEMENT 


Vital  Points  of 
Good  Storekeeping 


In  Rjgfat  Quantities 


At  Right  Prices 


CHART  XVI:    Your  success  as  a  retailer  depends  on  carefully  analyzing 

these  factors  that  determine  good  retail  management.   Analysis  is  foresight, 

and  foresight  gets  ahead  of  difficulties.     Check  up  your  business  against 

this  analysis  of  right  merchandising  policies 


:iii 


CHAPTER  XIII 


Storekeeping  Blunders  to  Avoid 

TAKE  a  $200  mark-dawn  on  that  gold  bag;  reduce 
this  bracelet  $20."  In  the  half  darkness  which 
follows  the  closing  hour  on  short  winter  days,  the  head 
of  one  of  the  largest  specialty  stores  in  this  country 
walked  by  the  counters  of  his  jewelry  department  and 
directed  new  price  levels  that  fell  below  cost.  A  knot  of 
assistant  merchandise  managers  and  buyers,  following 
him  by  a  few  steps,  noted  with  consternation  the  very 
radical  reductions  ordered  by  the  head  of  the  house. 

"This  jewelry  department  is  thousands  of  dollars 
over-bought,"  the  merchant  continued  at  the  last 
counter.  "It  is  a  small  retail  store  which  has  been  mis- 
managed. The  crudest  of  store-keeping  blunders  have 
been  made.  Only  the  fact  that  it  happens  to  be  under 
our  roof  keeps  it  solvent.  Around  the  comer  Jeweler 
Smith  would  miserably  fail  with  it. 

"On  looking  at  things  closely,  I  find  that  the  initial 
mark-up  is  small  for  jewelry.  Since  the  stock-turn  is 
low  with  jewelry,  we  must  cover  some  of  the  interest  on 
the  capital  tied  up  here  through  an  initial  mark-up 
which  is  more  liberal  than  usual.  Some  novelty  lines 
we  can  mark  up  one  hundred  per  cent  or  more.     The 

117 


118  STORE  MANAGEMENT 

general  nm  should  not  fall  below  fifty  per  cent. 

"The  sales  force  is  taking  nearly  twenty  per  cent  of 
the  sales,  which  is  far  too  high.  We  must  locate  the  best 
salespeople  and  speed  them  up  until  their  wages  are 
under  seven  per  cent  of  their  individual  sales.  Then 
the  slower  sellers  should  be  weeded  out  until  the  direct 
department  monthly  pay  roll  for  salespeople  is  seven  or 
eight  per  cent  of  the  jewelry  sales  for  an  average  month. 

'  *  The  turnover  will  not  be  over  one  or  two — far  below 
what  we  must  have.  Jewelry  turns  slowly,  and  a  good 
deal  of  staple  stock  must  be  carried  the  year  round.  But 
here  in  the  store  we  should  carry  only  enough  staple 
stock  to  give  'tone,'  and  must  feature  instead  popular 
priced,  quick  turning,  specials.  In  this  way,  we  can 
drive  the  turnover  up  to  five  or  six  times  a  year. 

* '  I  shall  also  stop  all  orders — no  more  stock  is  to  come 
into  the  department  until  it  is  in  a  normal  condition. 
Above  all,  in  the  future  estimates  of  jewelry  sales  are  to 
be  carefully  analyzed.  By  this  analysis  you  will  find 
that  a  fairly  constant  percentage  of  the  year's  jewelry 
sales  fall  in  each  month.  For  instance,  June  with  its 
weddings  will  carry  a  high  percentage  of  the  annual 
sales.  So  will  December,  the  gift  month.  Once  you  have 
these  averages,  fix  on  a  conservative  volume  for  a  year 
ahead  and  take  out  the  percentages  of  the  months  that 
face  you.  Subtract  these  estimated  sales  from  your 
stock  on  hand.    Then  buy  according  to  the  result. 

*  *  Now  I  've  read  you  fellows  quite  a  lecture, ' '  laughed 
the  merchant.  "What  I  have  said  are  merely  the  ele- 
ments of  good  retailing.  This  store  is  just  a  collection  of 
small  stores  under  one  roof  and  you  must  take  into  ac- 
count all  the  points  which  the  small-town  jeweler  would 
have  to  manage  for  himself. ' ' 

This  retailer  has  four  thousand  people  on  his  pay  roll. 


BLUNDERS  TO  AVOID 


119 


He  has  gathered  over  a  hundred  little  stores  into  his  big 
corporation.  Still  he  says  his  problems  and  blunders 
are  those  of  the  smaller  retailer.  Furthermore,  he  adds 
that  his  experience  in  selling  not  far  from  a  million 


— "■ 

■~" 

- 

H_ 

Incompetent  Help                          | 

-r 

Uncharged  Sales                           ( 

H 

Errors  in  Addition                         | 

-r 

Wasted  Time                            | 

. 

r\   •"""  " 

-r 

Extravagant  Use  o|  Supplies                |      | 

< 

Lost  Containers                          | 

Lf 

Uninterested  Sales  People                 | 

— 

H 

Bad  Accounts                             { 

Customers 

H 

Dissatisfied  Customers                     | 

- 

r^. 

Careless  Packing  and  Breakage              | 

-L 

Unsystematic  Delivery                     | 

RetaU 

Storekeeping 

Blunders 

- 

< 

Wrong  Deliveries                            | 

Service 

< 

Poor  Store  Arrangement                   | 

-c 

Overmeasure                             | 

Lf 

Wrong  Buying                            | 

H 

Unsystematic  Bookkeeping                | 

-c 

Wrongly  Figured  Profits                   | 

^ 

Office 

-r 

Failure  to  Take  Discounts                  | 

Lf 

Disregard  of  Losses  from  Mark  Downs 

— 

H 

Failure  to  Charge  all  Expenses 

-r 

Extravagant  Lighting                      | 

Overhead 

-f 

Disregard  of  Depreciation  on  Merchandise 

H" 

Disregard  of  Depreciation  on  Equipment       | 



CHART  XVTT:    The  storekeeping  blunders  shown  here  can  be  Riven  a  definite  value. 

if  you  will  analyze  your  practice  under  these  headings.     A  properly  classified  expense 

sheet  will  warn  you  of  many  of  these  errors 

dollars  of  his  stock  a  month  shows  that  these  blunders 
can  be  avoided,  and  tells  you  how. 

The  buyer  for  this  jewelry  department,  it  later  de- 


120  STORE  MANAGEMENT 

vcloped,  was  in  a  situation  exactly  like  that  of  the 
country  merchant  who  finally  woke  up  and  found  that  he 
had  been  too  busy  to  make  money — three-fourths  of  his 
work  could  be  done  by  a  five-doUar-a-week  boy.  The 
buyer  had  spent  his  days  working  out  price  ciphers  and 
persuading  manufacturers  to  create  branded  lines  for 
his  department.  Instead,  he  should  have  estimated  with 
care  his  probable  sales,  made  sure  that  his  expenses  were 
reasonable  and  planned  for  a  profit-making  stock-turn. 
Both  the  city  buyer  and  the  country  retailer  had  been 
lashed  to  detail  and  had  never  really  disentangled  them- 
selves enough  to  lead  their  business. 

Quick  and  Profit-Bringing  Stock  Tur*ns  Are  Usually 
Impossible  loithout  Modern  Stock  Records 

Dead  stock  is  a  difficulty  also  not  peculiar  to  city 
stores.  A  Southerner  had  a  few  thousand  dollars  he 
wished  to  keep  busy.  He  started  a  retail  store  and  put  a 
man  in  charge  to  "keep  shop." 

A  year  or  so  later  a  chance  to  sell  out  came,  even 
though  the  store  had  not  been  making  a  great  deal.  The 
purchasers  wanted  an  inventory  taken.  The  man  who 
had  been  ''keeping  shop"  for  the  Southerner  "guessed 
there  was  some  ten  thousand  dollars'  worth  of  stock  on 
hand." 

The  actual  inventory,  the  first  in  the  history  of  the 
store,  showed  a  stock  on  hand  worth  over  seventeen  thou- 
sand dollars.  Seven  thousand  dollars  had  been  buried  on 
the  shelves — just  as  thoroughly  as  if  at  the  bottom  of  a 
well.  Modem  stock  methods  would  have  made  the  neglect 
of  these  goods  impossible  for  more  than  a  few  months. 
Quick  turnovers  are  only  possible  to  retailers  who  know 
by  stockkeeping  methods  accurately  the  amount  of 
goods  normally  demanded  by  their  trade. 


BLUNDERS  TO  AVOID  121 

Analytic  stock  records  not  only  automatically  check 
stock  and  watch  the  mark-up,  but  usually  also  uncover 
valuable  information  regarding  the  best  selling  full  lines. 
If  cards  are  ruled  for  each  line  of  goods  and  every  price 
within  the  full  lines,  a  girl  can  keep  on  them  stock 
records  which  analyze  the  best  selling  lines.  The  cards 
should  separate  the  lines  into  departments  and  show 
daily  receipts  and  sales  of  stock.  The  retailer  who  by 
this  economical  system  can  place  his  finger  on  his  best 
selling  line  knows  how  to  display  and  renew  stock  to  the 
best  advantage. 

The  credit  man  for  a  wholesale  house  stepped  into  the 
shop  of  a  small  Western  retailer,  under  orders  to  in- 
vestigate the  little  store 's  stock.  He  found  goods  on  the 
shelves  which  his  house  no  longer  handled.  The  mer- 
chant was  evidently  at  sea  regarding  his  best  selling 
lines. 

"I'll  bet  you  half  your  store  that  fifty  per  cent  of 
your  sales  and  seventy-five  per  cent  of  your  profits  are 
on  items  marked  at  fifty  cents  or  under, ' '  the  credit  man 
finally  said. 

He  spoke  from  experience  with  hundreds  of  small  re- 
tail stocks. 

"You're  wrong,"  replied  the  merchant,  "fifty  cent 
lines  can't  give  half  my  volume.  My  big  trade  is  in 
suits. ' ' 

The  wholesale  man  took  three  days  to  investigate.  He 
sorted  the  sales  for  a  month  by  prices  and  in  the  end 
convinced  the  retailer  that  about  forty  per  cent  of  them 
were  around  half  a  dollar  each.  He  next  showed  that 
with  proper  buying  these  sales  alone  could  yield  more 
than  three-fourths  of  the  store's  profit. 

The  merchant  took  the  information  to  heart.  He  in- 
stalled duplicate  sales  slips  as  a  check  on  the  lines  which 


122  STORE  MANAGEMENT 

gave  quick  stock  turns.  He  remodeled  his  store  on  a 
basis  of  small  departments  and  specialized  on  these  low 
priced  lines  with  rapid  profits.  Working  out  the  profits 
on  individual  lines  enabled  him  to  shift  the  departments 
which  were  losing  money  to  more  favorable  locations  in 
the  store,  or  discontinue  them  if  necessary.  He  could 
also  advertise  departments  with  direct  consideration  of 
the  possible  profit  in  mind.  At  last  he  knew  his  business. 
Today  he  reckons  a  month 's  gross  profit  in  figures  which 
formerly  would  have  seemed  a  satisfactory  yearly  record. 

Yo^lr  Net  Profit  and  Expenses  Are  Percentages  of 
the  Selling  Price  and  Not  of  the  Cost 

An  investigator  with  a  liking  for  statistics  has  stated 
that  seventy-five  per  cent  of  the  retailers  in  America 
figure  their  profits  inaccurately.  Many  of  them  mark  up 
by  taking  a  percentage  of  their  cost  equal  to  the  desired 
gross  profit,  instead  of  working  back  from  a  selling  price. 

A  young  accountant  ran  into  this  snag.  He  bought  a 
half  interest  in  a  Pennsylvania  retail  store  which  showed, 
satisfactory  profits  on  paper.  But  when  he  went  over 
costs  and  mark-ups  with  his  partner,  he  discovered  that 
most  of  the  profits  were  imaginary. 

His  training  enabled  him  to  trace  down  the  difficulty. 
He  found  that  the  dangerous  trouble  lay  in  his  partner's 
sj'stem  of  estimating  the  cost  of  doing  business  as  a  cer- 
tain percentage  of  the  gross  and  then  adding  this  per- 
'jentage  to  the  cost  price  when  figuring  for  the  selling 
basis  on  individual  lines.  The  minute  the  new  member 
of  the  firm  used  the  desired  selling  figures  as  a  starting 
point  in  marking,  the  business  showed  healthy  profits. 

The  young  man  accountant  correctly  secured  his  gross 
profit  (expenses  were  twenty  per  cent  and  the  net  ten 
per   cent)    on   an   item   costing   ten   dollars,   including 


BLUNDERS  TO  AVOID  123 

freight  and  cartage,  Dy  assuming  the  selling  price  to  be 
one  hundred  per  cent  and  working  it  out  as  follows : 

Selling  price,  always   taken  as 100% 

Cost  to  do  business 20% 

Net    profit    desired 10%       307o 

Cost,    $10    70% 

Cost   in   percentage 70 

Dividing  cost  in  money,  $10,  by  its  percentage,  .70, 
gave  him  the  correct  selling  price :  $14.28. 

The  partner  would  have  incorrectly  marked  the  same 
article  at  $13.00,  or  $1.28  below  the  gross  profit  he  de- 
sired, after  making  this  calculation: 

20%  of  |10  for  cost  to  do  business $  2.00 

10%  of  $10  for  net    1.00 

Gross    profit    $  3.00 

Cost    10.00 

Selling    price    $13.00 

He  figured  his  thirty  per  cent  gross  profit  on  the  cost 
price,  instead  of  on  his  desired  selling  price.  But  the 
cost  was  only  seventy  per  cent  of  the  selling  price,  which 
must  always  be  taken  as  one  hundred  per  cent.  Thirty 
per  cent  of  seventy  per  cent  gives  twenty-one  per  cent, 
which  is  therefore  the  gross  profit  he  actually  secured. 
But  he  thought  he  was  getting  thirty  per  cent.  Seventy 
per  cent,  his  cost,  plus  twenty-one  per  cent,  his  actual 
gross  profit,  is  ninety-one  per  cent,  which  is  the  percent- 
age of  the  desired  selling  he  marked  his  goods  by.  lie 
therefore  lost  nine  per  cent  on  every  dollar's  worth  he 
sold. 


CHAPTER  XIV 

Winning  Over  Your  Sales  Force 

ONE  winter  morning,  eight  hundred  telegrams  were 
dispatched  to  as  many  store  managers  throughout 
the  country.  They  read:  "Did  you  say  thank-you  to 
every  man  who  bought  a  cigar  today?"  and  they  were 
signed  by  the  president  of  the  long  chain  of  cigar  stores 
with  which  these  managers  were  connected — a  two 
hundred  dollar  illustration  of  the  importance  one  king 
of  the  retail  world  attaches  to  courtesy  in  business. 

Business  men  who  have  the  right  to  speak  with  author- 
ity estimate  that  rare  element — courtesy — at  a  very  high 
value.  It  is  a  main  spring  in  business  life;  of  business 
building  value  because  it  is  so  rarely  found,  perhaps. 
Courtesy  does  not  mean  the  ingratiating  bow  and  scrape 
of  untutored  origin,  but  the  little  every-day  attentions 
that  cost  only  thoughtfulness,  yet  go  far  in  securing 
good  will. 

His  supply  of  collars  having  run  low,  a  New  York 
broker    stepped    into    a    haberdasher's    shop    on    the 


A  cheerful  smile  and  a  hearty  "thank  you"  from  a  clerk  enthusi- 
astic for  the  store  are  worth  many  mahogany  fixtures.  Enthu- 
siasm usually  has  to  begin  with  the  proprietor. 


124 


YOUR  SALES  FORCE  125 

Broadway  comer  nearest  his  residence.  This  haber- 
dasher had  paid  a  big  premium  for  his  location.  Here 
was  his  best  chance  to  get  some  of  his  money  back  by 
converting  this  broker  into  a  regular  customer. 

An  over-dressed  clerk,  jerking  a  box  of  collars  of  the 
desired  size  and  brand  from  a  shelf,  slapped  the  box 
down  on  the  counter  under  the  customer's  nose.  "Half 
dozen,  did  you  say  ? "  he  asked  the  already  irritated  pur- 
chaser. 

The  broker  nodded. 

"We've  only  got  five  left,"  said  the  salesman.  He 
grinned.  To  be  caught  out  of  stock  was  evidently  a  joke 
on  the  customer. 

|The  broker,  eager  to  escape  a  clerk  with  such  mis- 
guided instincts,  took  the  lot.  But  he  was  not  to  escape 
ao  easily.  He  had  yet  to  deal  with  the  man  who  hired 
that  clerk.  Half  way  to  the  cashier,  he  noticed  that  the 
sales  slip  given  him  called  for  the  payment  of  sixty-five 
cents.  ' '  See  here, ' '  he  protested,  ' '  you  have  made  a  mis- 
take, haven't  you?  You  are  charging  me  fifteen  cents 
for  that  fifth  collar." 

"Single  collars  sell  for  fifteen  cents,"  said  the  clerk. 
He  said  it  as  one  conscious  of  having  every  one  behind 
him  from  boy  to  boss. 

' '  So  you  're  going  to  make  me  pay  two  cents  extra  just 
because  you  are  out  of  stock,"  expostulated  the  broker. 

"I'll  speak  to  the  manager — " 

' '  My  time 's  worth  more  than  two  cents, ' '  retorted  the 
customer.  He  paid  the  charge  and  left  the  store  in  a 
huff.     This  store  made  an  enemy  instead  of  a  regular 


A  bundle  re-vorapped;  a  bit  of  information  cheerfully  given;  a 
rip  scum  up.  Interested  salespeople  win  customers  by  suck 
courtesies  and  attention. 


126  STORE  MANAGEMENT 

customer  because  it  was  run  on  a  system  of  blind  clerks 
and  raised  letter  rules. 

"Dont't  ever  allow  a  customer  to  leave  the  store  carry- 
ing a  lot  of  small  bundles,"  said  a  wise  merchant  to  his 
clerks.  "Even  if  she  made  most  of  her  purchases  else- 
where, offer  to  wrap  them  in  one  bundle,  or  to  deliver 
them  along  with  the  rest  of  her  order.  And  don't  let 
any  customer  enter  the  store,  no  matter  how  busy  you 
are,  without  in  some  way — ^by  a  pleasant '  good  morning,  * 
or  a  smile,  or  at  least  some  little  word  or  action — letting 
him  realize  you  know  he  is  there  and  that  you  will  wait 
on  him  just  as  soon  as  possible.  All  these  little  atten- 
tions make  friends  and  the  more  friends  we  have,  the 
more  sales  we  are  going  ,to  make. ' ' 

How  a  Grocer  Secured  That  Vahcahle  ''At  Home*' 
Feeling  among  His  Customers 

A  metropolitan  grocery  proprietor  awoke  to  the  fact 
that  his  business  lacked  the  personal  element.  His  clerks 
were  courteous  and  efficient  but  somehow  he  knew  that 
customers  failed  to  "feel  at  home"  and  all  because  a 
necessarily  large  sales  force  made  it  quite  impossible  for 
customers  to  know  the  different  clerks  personally. 

To  overcome  this,  he  devised  a  means  of  acquainting 
his  patrons  with  the  name  of  the  salesman  who  had  taken 
their  order,  or  who  had  waited  upon  them.  He  provided 
each  of  his  clerks  with  neat  business  cards  bearing  the 
individual  salesman's  name  in  the  lower  left-hand  cor- 
ner. One  of  the  clerks  hit  upon  a  plan  of  presenting 
these  cards  that  was  adopted  by  the  entire  sales  force. 

Success  isn't  made  up  of  orders.  It  is  made  of  re-orders. 
And  a  good  customer,  wrongly  treated,  is  soon  off  your  books. 
Explain  this  to  every  salesman. 


YOUR  SALES  FORCE  127 

After  selling  his  customer  a  bill  of  goods,  the  clerk 
presented  his  card  and  told  her  that  if  she  desired  per- 
sonal attention  given  any  orders  she  might  care  to  tele- 
phone in,  and  would  mention  his  name  to  the  telephone 
clerk,  he  himself  would  be  glad  to  see  that  her  orders 
were  promptly  and  carefully  filled.  Thus,  this  pro- 
prietor's personal  attention  problem  was  solved — and 
his  telephone  orders  were  increased. 

A  telephone  customer  dropped  into  a  store  in  the  rice 
belt.  She  had  read  of  the  extra  food  value  and  better 
flavor  of  the  unpolished  grain  and  decided  to  try  it.  The 
man  at  the  counter  failed  to  recognize  her  and  smiled  at 
her  request. 

"You  can't  buy  it,  and  if  you  could,  you  wouldn't  put 
it  on  your  table,"  he  told  her.  "It's  too  dark."  He 
failed  to  understand  that  she  rated  utility  above  mere 
appearance.  Another  dealer,  at  her  request,  made  it  a 
point  to  secure  a  sack  of  the  unpolished  grain  direct 
from  a  rice  grower.  On  an  investment  of  only  five  dol- 
lars, plus  the  trouble  of  writing,  he  was  able  to  satisfy 
her  curiosity,  make  her  a  steady  patron  and  incidentally 
stimulate  a  regular  demand  for  the  unpolished  grain. 

Training   in   Personal  Service    Helps   Both    Your 
Salespeople  and  Your  Profits 

Every  store  needs  its  formal  training  school — and 
every  first-rank  store  maintains  one  —  where  the  sales- 
people are  impressed  with  the  fact  that  patience,  tact 
and  a  common-sense  view  of  the  customers'  wants  dis- 
tinguish a  big  and  growing  business  man  just  as  surely 

Show  your  employes  that  you  arc  altray-i  ready  to  help  out 
and  work  vrith  them.  Make  them  feel  you  are  shoulder  to 
slwidder  vnth  them. 


128  STORE  MANAGEMENT 

as  does  his  pay  envelope.  Personal  adaptability  must, 
therefore,  be  considered  an  essential  of  store  efficiency. 

The  final  word  in  retailing,  however,  is  real  customer 
service — putting  all  ot  your  storekeeping  ability  at  the 
call  of  the  people  in  your  trade  territory.  A  customer 
had  asked  at  a  market  for  a  certain  brand  of  chipped 
beef  and  found  that  it  came  in  larger  quantities  than  he 
wished  to  buy.     He  inquired  for  a  smaller  package. 

"Yes,  we  have  the  other  brand  at  thirty -seven  cents," 
was  the  reply,  "but  we  don't  urge  it  on  our  customers. 
Deducting  the  weight  of  the  package,  you  get  only  about 
ten  ounces,  and  that,  as  you  can  see  for  yourself,  is 
hardly  value.  In  place  of  it,  I  would  suggest  one  of  the 
bargains  we  are  featuring  today,"  and  the  market  man 
went  on  to  display  what  he  conceived  to  be  best  fitted  to 
his  customer's  wishes. 

One  strong  reason  for  the  high  value  of  courtesy  may 
be  its  scarcity.    But  whatever  the  reason,  it  does  pay. 


If  You  Were 

An  Employee— 

What  could  the  firm  do  for  you  that 
would  make  you  do  more  for  them? 

A  Customer— 

Which  of  your  methods  would  you 
first  criticise.'* 

The  mental  habit  of  occasionally  look- 
ing at  yourself  from  the  viewpoint  of 
other  people  is  extremely  profitable. 


SOUT 

UNiVERS  .,ALirORNIA 


7  . 


mlmmm^^ 


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